Professional liability insurance has a retroactive date.
The well-crafted sentence above hardly qualifies as a news flash to many professionals. However, we find that our clients appreciate and benefit from a little extra professional liability know-how. This includes an understanding of some key professional liability concepts that extend beyond simply knowing that retroactive dates exist and how to find them in a policy form.
While there is no substitute for working with a competent and knowledgeable agent, some background knowledge can help you avoid some unfortunate and easily preventable claims situations.
Do not confuse retroactive dates with knowledge dates
A retroactive date, sometimes called a “prior acts date”, is an integral part of most professional liability and other claims-made insurance policies.
This can cause some confusion at first because these terms are often used interchangeably between different insurance carriers and agents. However, these terms are functionally identical in almost every form of claims-made coverage (e.g. professional liability) – they limit the scope of your coverage to negligent acts, errors and omissions that occur after that specified date in the past.
In the context of professional liability insurance, a prior acts date and retroactive date are the same thing.
A knowledge date on a professional liability policy is NOT the same as a retroactive date or prior acts date. A knowledge date excludes coverage for any claim or situation that could result in a claim that you are found to have knowledge of on the specified knowledge date (very similar to a no known claims/circumstance letter). When an insured changes to a new insurance company, the knowledge date protects the new insurance company from inheriting a claim that should have been reported to the previous insurance company.
It is wise to confirm your prior acts date remains the same throughout every professional liability policy you renew. While your knowledge date can theoretically change as often as every year, your retroactive date, as a general rule, should not – and getting the two dates swapped can inadvertently lose your firm many years of coverage.
Keep an eye out for additional insurance tips and information in the future. In the mean time, speak with your independent insurance agent to discuss how any information would specifically apply to your firm, or feel free to contact us with any questions. We’re here to help!