DEFINITION of 'Basic Extended Reporting Period (BERP)'

A reporting period extension provided to claims-made liability policyholders. Basic extended reporting period (BERP) 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.

BREAKING DOWN 'Basic Extended Reporting Period (BERP)'

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.

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 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 or optional extended reporting period may be offered by the insurer at the request of the insured, and is likely to cost the insured in additional premium payment.

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