All Lawyer Professional Liability (LPL) policies are on a claims made basis. A claims made format confuses many people.
There are 2 important and frequently confused concepts, to prevent gaps in coverage.
Retroactive Date – A “retroactive date” is a date cited in a claims-made policy or endorsement. When such a date is applicable, the policy or endorsement will not cover injuries or damage if the specified trigger of coverage (the error) occurred before the specified date. Coverage for those injuries or damage is excluded even if the claim is first made during the policy period. In short, a claims-made LPL policy does not cover claims when the act, error, or omission out of which the claim arises occurred before any applicable retroactive date.The retro date for a given coverage is often set to coincide with the effective date of the first policy providing that claims-made coverage, and it typically remains the same as the policy is replaced or renewed with subsequent claims-made policies. However, you may be contacted by an unethical salesperson who offers a lower premium by changing this date without telling you of this change. This would create an unwanted gap in coverage. You want to avoid surprises like this.
Extended Reporting Period (ERP) (Tail Coverage) – Claims made forms and endorsements often specify an ERP that is provided only if the named insured requests it in writing within 30 to 60 days (depending on the carrier) after the end of the policy period and pays the applicable additional premium when due. The ERP is a period after the expiration of coverage during which a claim may be made and still be covered by the policy. Note that while the ERP affords additional time for claims to be made, those claims must result from incidents that have occurred on or after the retroactive date and before the start date of the ERP (Tail) coverage.
As mentioned, the ERP is provided only if the named insured requests it in writing within 30 to 60 days after the end of the policy period and pays the applicable additional premium when due. A 60 day provision is fairly standard in claims-made policies. However, the policy should be consulted because there are some policies that require action in 30 days. It is a one-time option which Kaestner & Berry will assist you with.
Most LPL policies offer Unlimited ERP (tail) coverage upon retirement at no cost. There typically are several conditions to obtain this benefit at no cost. Kaestner & Berry will assist you in your planning to obtain this benefit.