Extended Reporting / Discovery Period Clause

Purpose

Under claims-made policies, as commonly used in D&O and professional indemnity insurance, cover generally ends when the policy expires, even where the underlying wrongful act was committed during the policy period. The extended reporting or discovery period clause closes this gap by allowing the insured to report claims arising from wrongful acts committed during the expired period for a further defined window after termination.

Effect and limits

Market practice distinguishes between a short, usually free basic extended reporting period of a few weeks to months, and a paid extended discovery period of several years, which is particularly relevant for departing directors and officers under D&O cover. The clause only lengthens the reporting window; it does not extend the period during which the insured wrongful act must have been committed, and the retroactive date remains unchanged.

Negotiation and practice

The clause becomes especially relevant on a company sale, merger, winding-up, or when individual directors or officers step down, as a multi-year extended discovery period is then frequently negotiated and separately priced. On a change of insurer, it should also be checked whether the new policy provides retroactive cover for the prior period, so that no gap arises between the old policy’s reporting period and the new policy’s retroactive date.