In addition to setting out the specific circumstances and timeframes in which an insurance carrier can cancel or non-renew a D&O policy, most states provide the insureds with special protected rights in these situations. These rights can often be found in the D&O policy itself.
One such provision is the right to purchase an extended period in which to report claims that would have been covered by the policy before it was cancelled or non-renewed. When these claims are first asserted and reported during this extended period, they are then covered under the policy terms and limits in effect prior to the policy’s termination. This extended reporting period (ERP) is often referred to as a discovery period. Some D&O insurers make discovery available when either the insurer or the insured cancels or non-renews.