What Is a Basic Extended Reporting Period (BERP)?
A basic extended reporting period (BERP) is a reporting period extension provided to claims-made liability policies. Basic extended reporting period applies to claims made after the retroactive date, and after the policy has been canceled, non-renewed, or changed to a different type of liability policy.
- Claims-made liability policies include basic extended reporting periods (BERPs) that allow policyholders to make claims after the retroactive date.
- BERPs can also cover after the policy has been canceled or not renewed.
- BERPs cannot always be added by the insured, and, instead, is an option that can only be added by the insurer.
- A short-term tail is often provided automatically if the insurer cancels or non-renews your policy, generally lasting 30 to 60 days, but many insurers offer a long-term tail for an additional premium.
How a Basic Extended Reporting Period (BERP) Works
The extended reporting period provision is added to the policy contract, and allows the policyholder to continue to report claims to the insurance company. The reporting period is typically extended for a finite period of time, such as 60 days. Claims-made liability policies is a policy where the timing of the claim dictates coverage. These policies are occurrence policies and claims are covered that are made during the policy period.
Companies that purchase claims-made liability insurance policies may ultimately not continue to use the same policy for a number of reasons. The policy may be canceled or not renewed; it may be replaced with a different type of liability policy, such as an occurrence policy; or it may be replaced with a claims-made policy with a different retroactive date, which is more beneficial to the policyholder because it covers claims from a longer period of time.
In some cases, the basic extended reporting period coverage is not an option that can be added by the insured, and, instead, is an option that can only be added by the insurer. The insurer will provide coverage over an extended reporting period if the insurer is the party that cancels the policy or does not allow it to be renewed. This is referred to as a one-way tail or unilateral extended provision. If both the insurer and the insured have the option of adding basic extended reporting period coverage, it is referred to as a two-way tail or bilateral extended provision.
Basic vs. Supplemental Extended Reporting Periods
Both short-term and long-term extended reporting periods may be included on a claims-made policy. A short-term tail is often provided automatically if the insurer cancels or non-renews your policy. It typically lasts for 30 or 60 days after your policy expires.
Many insurers offer a long-term tail for an additional premium. This coverage is usually provided via an endorsement. A long-term tail goes by many names. Depending on the policy, it may be called a Supplemental ERP, Optional ERP, Discovery Period, or simply Extended Reporting Period. An optional ERP is generally provided only if you request it in writing and pay the premium within a specified time period, such as 60 days after the policy expires.
Basic extended reporting period coverage is usually provided free-of-cost if the insurer is the party who decides not to let the policy renew, cancels the policy, or changes the type of liability policy type. A supplemental extended reporting period may be offered by the insurer at the request of the insured and usually costs an additional premium.