Basic Extended Reporting Period: What It is, How It Works

What Is a Basic Extended Reporting Period (BERP)?

A basic extended reporting period (BERP) is a reporting period extension provided to claims-made liability policies. Basic extended reporting period (BERP) applies to claims made after the retroactive date, and after the policy has been canceled, non-renewed, or changed to a different type of liability policy.

How a Basic Extended Reporting Period (BERP) Works

Claims-made liability policies are insurance policies where any request for compensation against financial loss cannot be filed after coverage has ended. Extended reporting periods (ERPs) are employed to offer some breathing space. When these provisions are added to a contract, it allows the policyholder to continue to report claims to the insurance company, typically for a finite period of time, such as 60 days.

Companies that purchase claims-made liability insurance policies may ultimately not continue to use the same policy for a number of reasons. The policy may be canceled or not renewed; it may be replaced with a different type of liability policy, such as an occurrence policy; or it may be replaced with a claims-made policy with a different retroactive date, which is more beneficial to the policyholder because it covers claims from a longer period of time.

In some cases, the basic extended reporting period (BERP) coverage is not an option that can be added by the insured, and, instead, is an option that can only be added by the insurer. The insurer will provide coverage over an extended reporting period (ERP) if the insurer is the party that cancels the policy or does not allow it to be renewed.

This is referred to as a one-way tail or unilateral extended provision. If, on the other hand, both the insurer and the insured have the option of adding basic extended reporting period (BERP) coverage, it is referred to as a two-way tail or bilateral extended provision.

Basic Extended Reporting Period (BERP) vs. Supplemental Extended Reporting Period (SERP)

Both short-term and long-term extended reporting periods may be included on a claims-made policy. A short-term tail is often provided automatically if the insurer cancels or non-renews your policy, and typically lasts for 30 or 60 days after your policy expires.

Many insurers also offer a long-term tail for an additional premium. This coverage is usually provided via an endorsement. A long-term tail goes by many names. Depending on the policy, it may be called a Supplemental ERP, Optional ERP, Discovery Period, or simply Extended Reporting Period. An optional ERP is generally provided only if you request it in writing and pay the premium within a specified time period, such as 60 days after the policy expires.

Basic extended reporting period (BERP) coverage is usually provided free-of-cost if the insurer is the party who decides not to let the policy renew, cancels the policy, or changes the type of liability policy type. A supplemental extended reporting period (SERP), meanwhile, may be offered by the insurer at the request of the insured and usually costs an additional premium.