Claims-Made Errors & Omissions Run-Off Policies for Accountants & Attorneys
Claims-made policies need to have continuous claims-made coverage to insure their are no gaps in coverage. When a claims-made policy lapses it can end your prior acts coverage if there is no a renewal with another claims-made policy matching your prior acts date or by purchasing an Extended Reporting Period Endorsement (ERP or Tail). The option to purchase an ERP is normally time bound with insurers only permitting the purchase of an ERP within 30 to 60 days of coverage termination. The amount of time to purchase is spelled out in the policy. If not purchased within the time frame given past acts coverage is lost and so is the ability to report a claim.
It is sometimes possible to obtain past acts coverage protection with a “Run Off” or Stand Alone ERP policy. This is a claims-made policy that does not cover any current work but does cover past acts. Unlike an ERP there is no lump sum payment for multiple years and generally only purchased on an annual basis. Also getting a standalone ERP (or Runoff) policy is not guaranteed.
Runoff policies are carefully underwritten and can be expensive, starting at around $5000 per year per professional per $1 Million of coverage. As these are normally offered by non-admitted surplus lines insurers, there will be additional taxes and fees added on.
Contact us for more information on Runoff Policies
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Lee Norcross, MBA, CPCU
California License # 0D87292
L Squared Insurance Agency, LLC ® DBA in California as L2 L Squared Insurance Agency, License # 0L93416
Managing Director, CEO
Lee@L2Ins.com
616-726-7080