Extended Reporting Periods Explained for Professional Liability Insurance (Errors & Omissions) Policies

Professional liability (Errors & Omissions, E&O) insurance in the United States commonly uses claims-made policies. That means coverage applies if a claim is both made and reported during the policy period (or an Extended Reporting Period). This article explains Extended Reporting Periods (ERPs or “tail” coverage)—what they are, how they differ from prior acts coverage, how much they cost, practical purchase tips, and real-world examples by city and carrier.

Table of Contents

What is an Extended Reporting Period (ERP / Tail Coverage)?

An Extended Reporting Period (ERP), commonly called tail coverage, is an endorsement or separate policy that allows insureds to report claims to a claims-made E&O policy after that policy has expired or been canceled. ERPs are crucial when:

You leave a firm or employment (exit scenario).
You retire or wind down operations.
You change carriers from claims-made to another claims-made carrier without securing nose coverage (prior acts).
You sell your firm and need to transfer or limit exposure.

Key distinctions:

ERP (Tail): Lets you report claims after the policy period for acts that occurred while the policy was active.
Prior Acts (Nose) Coverage: Applies when a new carrier’s claims-made policy includes retroactive dates covering earlier acts.

For practical guidance on when you need tail coverage, see When You Need Tail Coverage for Professional Liability Insurance (Errors & Omissions) — A Practical Guide.

Types of ERPs and Common Terms

Short-term ERP: 30–24 months. Often used by contractors or short wind-down periods.
Long-term/Unlimited ERP: No time limit on reporting claims for acts during the covered period.
Run-off vs. Endorsement: Run-off may be a separate policy; endorsement extends reporting rights on the expiring policy.
Claims-made with Prior Acts: When switching carriers, secure prior acts coverage to avoid buying a long ERP.

For firms negotiating tail/prior acts terms, see Buying Tail Coverage vs Changing Carriers: Cost and Strategy for Professional Liability Insurance (Errors & Omissions).

How Much Does Tail Coverage Cost? (US Market Benchmarks)

ERP pricing varies substantially by carrier, industry, claims history, limits, and policy size. Typical market multipliers (industry guidance):

Short-term ERP (12 months): ~25%–75% of last annual premium
Medium ERP (24 months): ~50%–100%
Unlimited ERP: ~100%–300% (commonly around 150%–200% for many professional firms)

Sources: Insureon (tail cost guidance) and The Hartford (E&O product guidance). See:

Example scenarios (illustrative, using typical market multipliers):

Small consultant in New York City (NYC) with $3,000 annual E&O premium:
- 12-month tail ≈ $750–$2,250
- Unlimited tail ≈ $3,000–$9,000 (typical market midpoint ≈ $6,000)
Mid-sized tech consultant in San Francisco (SF) with $8,000 annual premium:
- 12-month tail ≈ $2,000–$6,000
- Unlimited tail ≈ $8,000–$24,000 (typical midpoint ≈ $16,000)
Small accounting firm in Chicago with $12,000 annual premium:
- 12-month tail ≈ $3,000–$9,000
- Unlimited tail ≈ $12,000–$36,000 (midpoint ≈ $24,000)

National carriers offering E&O and ERP options include Chubb, CNA, The Hartford, Travelers, Hiscox, and Travelers. Pricing varies by carrier and specific loss history—some carriers (e.g., Chubb, CNA) are known to be more selective and may apply higher multiples for unlimited tail in higher-risk professions.

Hiscox advertises E&O policies for small businesses (premiums can start as low as a few hundred dollars for low-risk consultants) but tail cost is driven by last premium and risk profile: https://www.hiscox.com/small-business-insurance/professional-liability

Table: Typical ERP Durations vs. Market Cost Multipliers

ERP Type	Typical Duration	Typical Cost (as % of last annual premium)	Common Use Cases
Short-term ERP	6–12 months	25%–75%	Contracts with short reporting needs, short wind-down
Medium ERP	12–24 months	50%–100%	Transition periods, part-time exit scenarios
Unlimited ERP	Unlimited reporting	100%–300% (typical 150%–200%)	Retirement, firm sale (if buyer won’t assume liability), high-risk professions

Cost Drivers: What Underwriters Look At

Claims history (most influential)
Policy limits and retroactive date
Type of professional services (e.g., architects vs. IT consultants)
Firm size and revenue
Jurisdiction (claims environment differs: NYC, San Francisco, Los Angeles tend to be higher exposure)
Policy wording (endorsement language, sublimits)

For guidance on protecting against past exposures, read Prior Acts Coverage: How to Protect Against Past Work Exposure in Professional Liability Insurance (Errors & Omissions).

Buying Tail: Practical Steps and Negotiation Tips

Ask early — Request tail pricing at least 60–90 days before policy expiration.
Get competitive quotes — Compare pricing across Chubb, CNA, The Hartford, Hiscox, Travelers, and specialty markets.
Negotiate with carrier/broker:
- Offer to accept a limited ERP if appropriate.
- If selling the firm, negotiate that the buyer assume liability or include tail as part of the sale price.
Consider a “nose” + short tail when changing carriers — secure prior acts from the new carrier to reduce tail length/cost.
Document retroactive dates — Confirm that the ERP covers the retroactive dates you need.
Review contracts — Many employers and clients (especially in NYC, SF, LA) will require specified tail or prior acts coverage—see When Employers Require Tail Coverage: Contract and Employment Exit Scenarios for Professional Liability Insurance (Errors & Omissions).

Special Considerations by Location

New York City (NYC): High litigation frequency; carriers often price ERPs conservatively. Expect ERP multipliers at the higher end for professional services exposed to regulatory or high-dollar claims.
San Francisco / Silicon Valley: Technology and IP-related exposure can raise tail costs—ensure retroactive dates are clearly documented.
Los Angeles / California: Class action and consumer protection environments may increase risk; carriers may require broader defense limits.
Chicago / Midwest: Generally moderate market—pricing responsive to claims history and industry sector.

Quick Checklist Before You Buy Tail

Confirm the effective retroactive date and that it covers past work you want protected.
Decide on ERP duration (12, 24, or unlimited).
Request written tail cost and get it in the cancellation/renewal package.
Compare carrier offerings and limits (some carriers offer better unlimited tail pricing for long-standing accounts).
Keep records of policy numbers, retroactive dates, and tail endorsements.

For practical steps to avoid gaps, see Practical Steps to Secure Extended Reporting and Avoid Gaps in Professional Liability Insurance (Errors & Omissions).

Conclusion

Extended Reporting Periods (tail coverage) are essential for closing the gap when a claims-made E&O policy ends. Costs in the U.S. market vary widely—expect short-term tails to be a fraction of your annual premium and unlimited tails commonly priced at roughly 150%–200% of the last year’s premium depending on risk profile. Get quotes from major carriers (Chubb, CNA, The Hartford, Hiscox, Travelers), negotiate early, and document retroactive coverage carefully—especially in high-exposure cities like New York City, San Francisco, and Los Angeles.

References

Insureon — Tail Coverage for E&O: https://www.insureon.com/professional-liability/errors-omissions-tail-coverage
The Hartford — Errors & Omissions Insurance: https://www.thehartford.com/business-insurance/errors-and-omissions
Hiscox — Professional Liability Insurance: https://www.hiscox.com/small-business-insurance/professional-liability