The retroactive date on your policy specifies the earliest point in time that your insurance policy will provide coverage. This is also known as your prior acts coverage. Your professional liability policy is written on a claims made basis including a retroactive date. This means, in order for coverage to apply, the claim must be made and reported to the insurance carrier during the policy period and must have occurred after the retroactive date on your policy.
The retroactive date on the policy is usually determined by the date you first applied for and carried E&O coverage. Each year as you renew your insurance, your retro date should remain the same, even when you move from one carrier to another.
There are some occasions where you may lose your retro coverage and have to start your prior acts coverage over, from scratch, with a new carrier. If a policy cancels and there is a lapse in coverage, you jeopardize losing all prior acts coverage and will likely have to reapply for a new policy. We also see the unfortunate loss of retro coverage when there are claim related non-renewals issued. New carriers writing the risk may not be willing to take on all of the prior years exposures with significant claim activity, and instead, cover it only for any prior acts going forward.
If you were to lose retro on your existing policy, we would provide you with Extended Reporting Period (ERP) options, otherwise known as “tail” options, from your expiring policy. If purchased within a reasonable amount of time, the tail extension will give you additional time available to report claims under the expired policy. The ERP terms are laid out in all existing policies and vary by carrier.
It is important to know your retroactive date on your policy, and you should be looking over your insurance paperwork every year so as to ensure accuracy. Make sure you contact us if something does not seem right or if you have questions.