Most professional liability policies are written on a claims-made basis, which means they typically respond to claims made while the policy is in force, subject to other conditions. A second date on the policy, the retroactive date, can quietly determine whether an old project is covered at all.
What a Retroactive Date Is
The retroactive date, sometimes called the retro date, is the earliest date on which a wrongful act can have occurred for the policy to potentially cover a claim. If the act that led to the claim happened before the retroactive date, the policy generally does not respond, even if the claim is first made during the policy period.
Claims-Made Basics
Under a claims-made policy, two things typically need to line up: the claim has to be made during the policy period (or an extended reporting period), and the underlying act has to have occurred on or after the retroactive date. This is different from an occurrence policy, which generally responds based on when the injury or damage happened. The distinction can feel technical, but it often decides coverage outcomes.
How Retro Dates Are Set
For a business buying its first policy, the retroactive date is often set to the policy’s start date, unless the insurer agrees to give credit for earlier work. As long as the business keeps renewing with the same carrier, the retro date typically stays the same, which means coverage for past work builds over time. This is sometimes called continuity of coverage.
What Happens When You Switch Carriers
Moving to a new carrier can create a gap if the new policy has a later retroactive date than your old one. Work done between the old and new dates may be uncovered. When shopping, many professionals ask for “full prior acts” or a retroactive date that matches their existing policy. Insurers may ask about known circumstances and may decline to give prior acts coverage for those, so disclosure matters.
Why Gaps and Lapses Cause Trouble
A lapse in coverage can reset or interrupt the retroactive date. A business that lets its policy expire, even briefly, may find that its next policy starts a fresh retro date. Setting reminders for renewals and discussing any change in coverage with your agent beforehand can help avoid this problem.
Retirements, Sales, and Tail Coverage
If you stop practicing or sell your business, claims can still arrive years later. Extended reporting coverage, often called tail coverage, may allow claims to be reported after the policy ends for acts that occurred before it ended. Whether and how it is offered depends on the policy.
Check Your Declarations Page
Find the retroactive date on your declarations page today. If you do not see one, or it is later than your first date of service to clients, ask your agent what it means for your coverage.
Policy forms and carrier practices differ. An independent agent can help you review your retroactive date, plan for changes, and compare carriers on prior acts options.
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