What Does Supplemental Extended Reporting Period Mean?
A supplemental extended reporting period is an additional period after a liability policy expires that a policyholder can report a claim during and still get coverage for. In many liability policies, claims will not be paid out if they occur after the policy period ends. So, supplemental extended reporting periods provide coverage after policy periods expire for a certain amount of time.
Insuranceopedia Explains Supplemental Extended Reporting Period
Supplemental extended reporting periods are desirable for companies that suspect that they may have need to file a claim after the policy period ends. If a company has to file a claim after a policy period ends, and they don't have an SERP, then they can be stuck shouldering the full loss themselves. This could be enough to bankrupt small companies if the claim is large enough. In general, to get access to a supplemental extended reporting period, the policyholder must request it, and pay extra for it.