UK: 1. Period within which a defalcation must be discovered and notified to the fidelity guarantee insurer. The customary six month period runs from the employee’s resignation, dismissal or retirement or three months from the expiry of the policy whichever occurs first. 2. See EXTENDED REPORTING PERIOD.
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The period of time, commonly one year, after the termination of a surety bond during which covered loss may be discovered, reported, and covered. Also refers to the optional extension of coverage that may be purchased by insureds under certain circumstances following expiration of the policy. If this coverage extension is purchased, claims made against insureds during the extension period are covered if the claims are for wrongful acts (for a D&O policy) occurring before the expiration of the original policy period. Depending upon the terms of the particular insurance policy, this optional extension of coverage may be available only if the insurance company cancels (other than for non-payment of premium) or refuses to renew the policy, or alternatively, may also be available if the insureds cancel or refuse to renew the policy. If the coverage extension is available under both of those situations, the extension is referred to as bilateral discovery or ERP. Coverage during this extension period is subject to the same limit of liability as applies to the original policy period.
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The time allowed to the insured after termination under certain bond and Policy provisions to discover a loss which occurred during the period by the contract and would have been recoverable had the contract continued in force. This period varies from six months to three years where a Company can fix the period of time to be allowed. It may be governed by statute and in certain bonds the period is indefinite because of statutory requirements.