What Happens After Practice

Explaining Tail Coverage, formally called Extended Reporting Endorsements

An Extended Reporting Endorsement (ERE) – also known as tail coverage – is needed because of the claims-made nature of lawyers professional liability insurance. A claims-made policy provides coverage for alleged actions that occurred during the time the policy was in effect. In other words, the coverage provided in a claims-made policy ends when the coverage terminates.

Professional liability policies afford coverage for one year at a time, so in order for an attorney to have coverage in force at all times, a policy must be obtained every year. Continuity of coverage is paramount in claims-made coverage. That said, an attorney can only purchase professional liability insurance while in active practice. This poses a problem for an attorney who is going to go into retirement, become a judge, change firms or enter a non-legal profession. That’s where ERE/tail coverage comes in.

The purchase of an ERE is not a separate policy. Instead, the endorsement extends the terms and conditions of the prior existing policy and allows an additional period of time in which a claim may be reported to the insurance carrier. The purchased endorsement allows the attorney to report claims to the insurer after the policy has expired or been cancelled.

Read below for common questions we receive about ERE/tail coverage.

Does an ERE cover me if I decide to do some pro bono work for a friend after I've retired?

No. It is imperative to note under most ERE provisions, the purchase of the endorsement is not one of supplementary coverage or of a separate and distinct policy. This means no coverage will be available for a negligent act or omission which occurs during the time the ERE is in effect.

Why would I need an ERE if I change law firms? Won't my new firm cover me?

Please be aware an ERE is not just important when an attorney leaves the practice of law for retirement, the judiciary or a non-legal profession, it can also be important when an attorney changes law firms. Although the new firm may have a professional liability policy, a typical policy may only provide coverage for claims made while the attorney is a member of said law firm. The new firm’s policy may not extend coverage for acts prior to the attorney joining the new firm.

If I'm changing careers and I worked for an established firm, why would I need an ERE?

Some attorneys who are leaving the legal profession feel like there is no need to purchase an ERE when they leave an established law firm. The assumption is the law firm would be named in any lawsuit and would be responsible vicariously for any claim that could be made. This assumption may or may not be correct depending upon the factual situation presented. If the attorney has any concern about the longevity of the firm or about the likelihood the firm will continue to purchase professional liability coverage, the attorney should opt to purchase an ERE. Remember, no policy in place at the time the claim is made means no coverage.

I plan to reduce my policy limits when I semi-retire to save money. How will this affect my ERE?

When the attorney retires, for purposes of the ERE, the attorney will retain the policy limits that were in place on the last policy of the attorney’s career. The attorney should consider whether the premium savings on the reduced limits of liability would be worth the potential exposure in retirement. Remember, all claims reported under the ERE will be subject to the available residual limits of the last policy in force and this limit may not be enough coverage. The limits, whatever they are, are for the entirety of the ERE and will be reduced by any defense cost or indemnity payments made on behalf of the attorney.

When can an ERE be purchased?

The period in which an attorney can purchase an ERE is very limited. Most policies allow a 30-day window, which starts running on the effective date of the expiration or termination of the existing policy. This window is the only chance to purchase an ERE. When the time period expires, the opportunity is gone.

What happens if I pass away before securing an ERE?

If an attorney dies, an ERE can be purchased in the name of the deceased attorney’s estate if timely pursued in accord with the policy provisions. A legal malpractice cause of action can be brought after an attorney’s death. The right survives resulting in the attorney’s estate being named as the defendant. Attorneys, who by nature exert substantial effort to protect their clients, should exercise the same effort on their own behalf. Best practices would be for the attorney to have written instructions to alert the heirs to the procedure and need for an ERE to protect the attorney’s estate and family.

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