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Selling PracticeAccountant called wanting to know how to make sure that she had insurance coverage for her past acts once she sells her practice.

All Accountant E&O policies sold in the US are written on a claims-made basis.  In essence, once your Travelers Insurance Policy is canceled so is your coverage for past acts.   The Travelers policy does provide for purchasing an Extended Reporting Period Endorsement (ERP) to protect your past acts.  I have attached the page from your policy that deals with these provisions.  Please note that you have 60 days to request and pay for an ERP from the termination date of coverage. 

The cost of an ERP is on Item 8 of your declarations page per the attached:

ITEM 8           OPTIONAL EXTENDED REPORTING PERIODS:

Additional Premium Percentage:       Additional Mo

125%                                                    12

185%                                                    24

200%                                                    36

250%                                                    60

300%                                                    Unlimited

Your annual premium is $500.  So for example the cost of an unlimited ERP is 3 times your annual premium or $1500.00.  The total cost of the ERP must be paid in full prior to the end of the 60 days after termination.  It cannot be financed or put on a direct bill program.  ERPs must be purchased from the insurer that has the coverage inforce prior to termination.

Once you become an independent contractor for the buyer, the buyer will be responsible for providing insurance coverage for you. 

Let me know if you have any further questions.  Good Luck with your future endeavors.

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