1. Forms
2. CY
3. CY-20-01

What the Form Is

The CY 20 01 Supplemental Extended Reporting Period endorsement is designed for use with claims-made commercial cyber insurance policies. Its primary purpose is to provide additional time, beyond the policy expiration date, for the insured to report claims that arise from wrongful acts occurring before the policy ended (or after any applicable retroactive date). This is often referred to as "tail coverage." A key feature of this specific endorsement is that it provides new, supplemental aggregate limits for claims that are first received by the insured and reported to the insurer during the supplemental extended reporting period. The duration of this extended period is specified in the endorsement schedule.

Classes of Business It Applies To

This endorsement is relevant for any business or organization that holds a claims-made cyber insurance policy and is concerned about potential claims arising from past activities after the policy has terminated. This includes situations where a business is:

• Ceasing operations
• Being acquired or merged
• Switching from a claims-made policy to an occurrence policy
• Switching to another claims-made policy with a different retroactive date or insurer, potentially creating a gap in prior acts coverage.

Real-world example: A technology consulting firm that has provided services for many years decides to dissolve. To protect against future lawsuits alleging data breaches or errors in their past consulting work that might only be discovered and claimed after dissolution, the firm could purchase the CY 20 01 endorsement to extend the reporting window for such claims under their expiring cyber policy.

Special Considerations

• Written Request Required: The named insured must typically request this endorsement in writing within a specific timeframe after the policy period ends, often 60 days.
• Premium Payment: A premium is charged for this endorsement, and it must be paid for the coverage to be effective.
• Non-Cancellable: Once the premium for the CY 20 01 is paid, the endorsement generally cannot be cancelled by the insurer.
• New Supplemental Limits: Unlike some basic or automatic tail coverage, this endorsement provides a new set of aggregate limits specifically for claims reported during the supplemental extended reporting period. This is a significant benefit as it doesn't just rely on any remaining limits from the original policy term.
• Scope of Coverage: The coverage provided during the supplemental extended reporting period is typically for wrongful acts that occurred prior to the end of the policy period and after any applicable retroactive date.

Real-world example: A healthcare provider is switching insurance carriers for their cyber liability. Their old claims-made policy will terminate. To ensure that claims arising from patient data privacy incidents that occurred during the old policy period but are not discovered and reported until after the switch are covered, they would purchase the CY 20 01 from their outgoing insurer. The new supplemental limits would apply to these late-reported claims.

Key Information for Agents and Underwriters

• Pricing: The premium for this endorsement is usually a percentage of the expiring policy's annual premium. Factors influencing the cost include the length of the extended reporting period chosen (e.g., 1, 2, 3, or more years), the expiring policy's limits, and the insured's risk profile and claims history.
• Risk Assessment: Underwriters should evaluate the likelihood of latent claims. This involves reviewing the insured's past operations, data security measures, industry-specific risks, and any known incidents that have not yet resulted in claims. The longer the tail requested, the higher the potential exposure.
• Coverage Gaps Avoidance: Agents should proactively discuss this option with clients who have claims-made cyber policies, especially at renewal if non-renewal by either party is a possibility, or if the client is undergoing significant business changes. It is crucial for preventing potentially catastrophic coverage gaps for prior acts.
• Underwriting Guidelines:
  • Confirm the eligibility of the underlying cyber policy (e.g., CY 00 10, CY 00 11, etc.).
  • Ensure the insured's written request is received within the timeframe specified in the policy (typically 60 days from policy termination).
  • Clearly document the length of the supplemental extended reporting period and the corresponding premium on the endorsement schedule.
  • Explain the function of the new supplemental aggregate limits to the insured.
  • Note that state availability and specific wording can vary by edition date (e.g., CY 20 01 01 18 vs. CY 20 01 11 21, the latter sometimes titled "Additional Extended Reporting Period - Elected").