Does The Discovery Provision Apply During The Extended Reporting Period?
- Topics:
- Directors and Officers Coverage
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Overview: There is wide variation in the scope of coverage provided by extended reporting period (ERP) endorsements within claims-made policies. One often-overlooked but critical variation is whether the policy's discovery provision is operative during the period covered by the ERP. A discovery provision in a claims-made policy allows an insured to report to the insurer "circumstances" or "incidents" that have taken place during the term of the policy, if such circumstances are likely to, but have not yet, given rise to a "formal" claim against an insured (i.e., receipt of a summons and complaint). If, after the claims-made policy has expired, those circumstances later give rise to a claim, coverage will apply regardless of how far in the future a "formal" claim is actually made against the insured. Under a majority of the extended reporting period, endorsements offered under claims-made policies, the discovery provision of the policy applies. However, this is not the case with a significant minority of insurers' policy forms. The purpose of this article is to explain why this distinction is critical.
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Format: HTML | Date: Mar 2002 | Pages: 1
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