Switching E&O carriers for a better rate or broader terms sounds like a straightforward decision, until you consider what happens to the work you already did under the old policy. Professional liability insurance is almost always written on a claims-made basis, and that structure means the timing of a carrier switch can accidentally create a gap covering years of past work — a gap that only becomes visible when a client from three years ago finally files a claim.
A Quick Refresher on Claims-Made Coverage
A claims-made E&O policy typically responds to claims that are both made against you and reported during the policy period, regardless of when the underlying work actually happened — as long as that work falls on or after the policy’s retroactive date. The retroactive date is the key number here: it typically marks the earliest point in time the current policy will look back to, and work performed before that date generally isn’t covered no matter when the claim is eventually filed.
Why Switching Carriers Puts the Retroactive Date at Risk
When you move to a new carrier, that new carrier doesn’t automatically inherit your old retroactive date. If the new policy is written with a fresh retroactive date — meaning the date you switched — then any work performed before the switch typically has no coverage at all once the old policy expires, unless something is specifically done to carry that older coverage forward. This is one of the more expensive mistakes a professional can make without realizing it, because the business often keeps operating normally for years before a claim from that earlier period ever surfaces.
Prior Acts Coverage: Carrying the Old Retroactive Date Forward
The fix is typically to negotiate “prior acts” or “full prior acts” coverage with the new carrier, which means asking them to honor your original retroactive date rather than resetting it to the policy’s start date. Many carriers will do this, particularly if you can show a continuous claims-made history with no gaps in coverage, but it generally has to be requested and confirmed in writing — it isn’t automatic just because you disclosed your prior carrier or provided loss history.
Why a Coverage Gap, Even a Short One, Is a Problem
Even a brief lapse between the old policy ending and the new one starting can undermine prior acts negotiations, since most carriers expect continuous coverage as a condition of extending the retroactive date. A lapse of even a few weeks — while shopping for a better rate, waiting on a renewal decision, or simply letting a policy expire before the new one binds — can leave work performed during the gap, and sometimes work performed before it, without a clear path to coverage.
What to Ask Before You Switch
Before finalizing a move to a new E&O carrier, it’s worth confirming explicitly: what retroactive date the new policy will carry, whether there’s any gap between the old policy’s end and the new one’s start, and whether the new carrier has seen your prior claims history as part of underwriting the prior acts request. These questions are straightforward to ask upfront and considerably harder to fix after the fact.
A lower premium on a new E&O policy isn’t a good deal if it quietly leaves years of past work uncovered. An independent agent can help negotiate prior acts terms and make sure a carrier switch doesn’t create a gap you won’t discover until a claim does.
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