Unilateral Extended Reporting Period Provision
What is Unilateral Extended Reporting Period Provision
A unilateral extended reporting period provision is an insurance contract provision that permits the insured to expand the period of time wherein coverage is given in the case that the insurer chooses to cancel or not restore the insurance contract. Unilateral extended reporting period provisions are additional items, and insured parties must pay an extra fee to have this provision. In industry speech, an extended reporting period provision is otherwise called "tail coverage".
Understanding Unilateral Extended Reporting Period Provision
A unilateral extended reporting period provision is otherwise called one-way tail extended reporting provisions. People and organizations that purchase claims-made liability insurance policies may at last not keep on involving similar policy for a number of reasons. The policy might be replaced with an alternate type of liability policy, like an occurrence policy; it could be replaced with a claims-made policy with an alternate retroactive date, which is more beneficial to the policyholder since it covers claims from a more extended period of time; or it very well might be canceled or not reestablished.
Many claims-made policies give — or might be required to give by controllers an extended reporting period provision. At times, the extended reporting period coverage isn't an option that can be added by the insured, and on second thought is an option that must be added by the insurer. The insurer will give coverage over an extended reporting period assuming the insurer is the party that cancels the policy or doesn't permit it to be recharged. This is alluded to as a one-way tail or unilateral extended provision. In the event that both the insurer and the insured have the option of adding [basic extended reporting period](/essential extended-reporting-period-berp) coverage, it is alluded to as a two-way tail or bilateral extended provision.
Unilateral versus Bilateral Extended Reporting Period Provisions
Unilateral extended reporting period provisions are less alluring than bilateral reporting period provisions since coverage must be extended on the off chance that the insurer is the party to end the insurance contract. This means that the insured doesn't have the option of broadening coverage without the insurer accomplishing something first.
Most professional liability policies furnish an insured with options to purchase an assortment of extended reporting period provisions of differing length. These types of extended reporting periods are of the bilateral assortment, since the insurer may likewise decide to remember it for the policy at the time it is purchased or make it accessible for purchase sometime later. The insured ordinarily may purchase the ERP for a period of one year, three years, five years, and, under certain policies, a decade. The cost is generally a numerous of the last annual policy premium and relies on the timeframe chose for the extended reporting period.
Illustration of Extended Reporting Provision
Jonathan has been laid off. In such a situation, normally, he wouldn't have medical insurance since coverage from his previous place of employment ought to cease to exist on his last day at work. Notwithstanding, unilateral extended reporting provisions empower his previous employer to cover him for an additional three months after his last day. (This situation expects that Jonathan's employer has a substantial claims made policy to cover its employees). Jonathan must get a new line of work inside that time span to guarantee proceeded with medical insurance.
Features
- In the event that the coverage period is extended by the insurer, the insured can commonly purchase the contract following a period of one year, three years, five years or a decade.
- Bilateral extended report period provisions are desirable over unilateral extended period provisions.
- A unilateral extended report period provision permits the insured or insurer to expand the coverage time span for a claims-made insurance contract, in the event that it isn't recharged or canceled or is changed to one more type of policy.
