Is an Attorney Malpractice Insurance Tail (ERP) Truly “Full Prior Acts”?
When attorneys consider purchasing an Extended Reporting Period (ERP), also known as “tail coverage,” a common question arises: Does the ERP provide Full Prior Acts coverage?
Let us break down the facts to eliminate confusion.
What Is an Extended Reporting Period (ERP)?
An Extended Reporting Period endorsement allows attorneys to report claims after policy coverage termination due to cancelation or non-renewal. Certain professionals misunderstand a key concept:
An ERP is not a separate insurance policy.
Instead, it is a short endorsement, often just one page or two pages attached to the last active malpractice insurance policy in force at the time coverage ended.
Does an ERP Provide Full Prior Acts Coverage?
The answer depends on the original policy.
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- If your last malpractice policy had Full Prior Acts coverage, then the ERP will also reflect Full Prior Acts.
- However, the ERP does not change or expand the prior acts date of the underlying policy.
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In simple terms:
The ERP inherits the same coverage terms as the original policy; it does not improve them.
Important Limitation: The Reporting Period
While the ERP keeps your prior acts coverage intact, it only applies within the specified reporting period, which may range from a limited number of years to unlimited coverage.
Even if you purchase an unlimited reporting period, your coverage follows:
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- The original policy’s prior acts date
- The original policy’s terms and conditions
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Aggregate Policy Limit: A Critical Risk
An overlooked aspects of ERP coverage involves the aggregate policy limit.
Here is how it works:
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- Claims reported during the last inforce term before the policy ended
- Plus, claims reported during the ERP period
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➡️ All count toward the same aggregate limit.
This creates a potential risk:
If the aggregate limit is exhausted, coverage for future claims may effectively end.
This is especially important if:
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- There was active litigation in the final policy year
- New claims emerge after purchasing the ERP
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In Summary
Before purchasing tail coverage, keep these points in mind:
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- ✅ ERP is an endorsement, not a new policy
- ✅ It does not enhance your prior acts coverage
- ✅ It simply extends the time to report claims
- ⚠️ The aggregate limit remains unchanged and can be exhausted
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An Extended Reporting Period endorsement is a valuable safety net, but only if you understand what it does (and does not do).
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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
