What is an "Extender Clause"?
An "extender clause" is a provision commonly found in insurance policies, specifically liability insurance, and it extends coverage beyond the policy's expiration or cancellation date for certain claims or events that occurred during the policy period. This clause is also known as a "claims-made-and-reported" or "discovery" clause. The extender clause addresses situations where a claim arises after the policy has expired or been canceled, but the event triggering the claim occurred while the policy was in force.
How an Extender Clause Works:
Policy Period:
The insurance policy has a specified period during which coverage is provided. This period is known as the policy period.
Reporting Period:
The extender clause introduces a reporting or discovery period that extends beyond the expiration or cancellation of the policy. This period allows the insured to report claims for events that occurred during the policy period.
Triggering Events:
The coverage under the extender clause is typically triggered by the insured's discovery of a claim or occurrence during the reporting period.
Claims-Made Policies:
Extender clauses are commonly associated with claims-made insurance policies, where coverage is triggered when a claim is made and reported during the policy period or the extended reporting period.
Sample Extender Clause:
"Extender Clause: Notwithstanding the expiration or cancellation of this policy, the insured shall have an additional reporting period of [specified number of days or months] to report any claims arising from occurrences during the policy period. Coverage for such reported claims shall be subject to the terms, conditions, and limits of this policy."
In this example:
The extender clause allows the insured to report claims within a specified period after the policy's expiration or cancellation.
The reporting period is an extension beyond the policy's expiration.
The coverage for reported claims is subject to the terms and conditions of the original policy.
Extender clauses are particularly relevant in claims-made liability insurance, such as professional liability insurance, where claims may not be immediately apparent or reported. This provision helps ensure that claims arising from incidents during the policy period are still covered even if they come to light after the policy has ended. Policyholders should carefully review the terms of the extender clause in their insurance policies to understand the reporting period and any conditions that may apply.
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