Assisted Living Facility Insurance - Part 5
September 15, 2011 04:00PMBy: Jeff Schmidt, To Read My Other Posts, Click here
Category: Business Insurance
Part 5: Extended Reporting Period and Prior Acts Coverage
As discussed in previous blogs, Occurrence forms offer ideal coverage for assisted living liability policies, however, there are several factors to consider when making a switch from a Claims-Made to Occurrence policy. These factors will also apply if your Claims-Made policy was cancelled or non-renewed.
The first consideration is an Extended Reporting Period endorsement, which is typically offered by the expiring company and allows you to report a claim that occurred during the prior Claims-Made policy to the previous company. Keep in mind that Occurrence forms only cover claims that occur while the policy is active (regardless of when they are reported) and Claims-Made forms only cover claims that occur AND are reported while the policy is active.
Without an Extended Reporting Period, you are essentially bare of any coverage from the date your Claims-Made policy expires moving forward. As you can imagine, this is quite a risk to take since claims often take weeks or months to surface. It is always advisable to purchase an Extended Reporting Period endorsement to hedge against any pending incidents you might be unaware of.
The second option is known as Prior Acts Coverage, which is typically offered by the new company as protection against any incidents that occurred prior to switching. The main difference between the two is which company is providing the coverage (old or new). Since both address the same common issue, ultimately the decision on which to purchase depends on the premium charge and time period.
Due to the nature of the assisted living industry, it is not uncommon for claims to be filed months or even years after the incident occurred. Without purchasing either the Extended Reporting Period or Prior Acts Coverage, you are essentially leaving a gap where you are vulnerable to claims without any responding coverage. It is crucial to discuss and evaluate both options with your agent when contemplating a switch in insurance companies.
Jeff Schmidt – Assisted Living Insurance Specialist
Office: (602)263.0777 ext 105
Email: JeffS@InsuranceArizona.com
This article is for informational purposely only. There is no legal advice being suggested or proffered and the author assumes no responsibility or liability for the actions taken or not taken by the readers based upon such information.
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Southwest Insurance Brokers, LLC
510 East Camelback
Phoenix, AZ 85012
Ph: (602) 263-0777
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