The "Legal-Ease" Glossary
This refers to extra time after a policy's expiration date when a small business can still be covered. It’s especially useful when you forget to immediately renew your claims-made policies, which only offer benefits if your policy is in force…
- When the triggering incident happened.
- When the claim is filed.
Depending on your state’s statute of limitations for certain lawsuits, it can be a long time between a triggering incident and a filed claim. So if you’re notified about a lawsuit during your Errors & Omissions Insurance policy’s grace period, you may still be able to get coverage for your legal expenses. Just make sure to renew your policy ASAP!
Generally speaking, your insurance provider will offer you a "grace period" after a late or missing premium that allows you a little "wiggle room" if you're having trouble cobbling together the payment. You're still insured during this period, but coverage only lasts about 30 days.
If you still haven't paid by the end of your insurer's grace period, it has the right to cancel your policy. And you don’t want that – you never know when old work projects or accidents will come back to haunt you.
Plus, in many cases, insurance companies see previous cancellations as a red flag and may charge higher premiums to applicants with a cancellation-riddled history. If you operate on a shoestring budget like many small-business owners who are just starting out, you likely don’t have the breathing room to shell out more for premiums.
The moral of the story: know how long your grace period is and renew your policies before it runs out if you don’t want to pay more for insurance.
To learn other ways to reduce your insurance spending, check out our insurance saving tips.
RETURN TO GLOSSARY