Question from Client:
Is this Attorney Malpractice Insurance Policy Extended Reporting Period Endorsement (ERP or Tail) Full Prior Acts?
A common misconception is that there is a separate policy issued once an ERP is purchased on for an attorney malpractice insurance policy. This is not the case. Generally the endorsement is just one sheet of paper with only one or 2 paragraphs. A lot of money spent for one sheet of paper.
With an ERP there is no a separate policy that is issued. The Extended Reporting Period Endorsement is attached to the last in force policy that was in force at the time coverage was terminated. Other than amending the reporting period, for a specified time from up to unlimited, the endorsement does not amend any coverage or policy terms. So if your last policy was ‘Full Prior Acts’, then the Extended Reporting Period Endorsement will be ‘Full Prior Acts’. Just remember that the endorsement is only ‘Full Prior Acts’, for the reporting period specified on the endorsement.
Interestingly enough, if your last policy only had 1 year of prior acts coverage, you might be able to extend the reporting period to ‘unlimited’. But the endorsement does not change the policy’s prior acts date.
All other terms and conditions of the terminated attorney malpractice insurance policy continue to remain in force. For most ERP purchases this is not a big concern. But current claims activity in the last policy period and/or after the ERP is purchased can cause an issue with bumping into the aggregate policy limit. Each claim reported in the last policy period plus any reported during the period of the ERP, count against the aggregate policy limit. In some cases this can exhaust the aggregate limit. If this happens, once the aggregate limit is reached the coverage for future damages, essentially ends.