Concerned about cover for the work you have done in the past? If you are, then you need to make sure that your policy has the correct ‘retroactive date’.
Most types of insurance cover you for claims that occur from the start date given on wards only. This has to be the case otherwise insurers would soon run out of money paying past claims, and premiums would be ridiculously high as a result. Professional Indemnity insurance is very different.
How Does Retroactive Cover Work?
Professional Indemnity policies are ‘Claims Made’ policies – they cover you for claims that are made against the business whilst your policy is in force. If the claim relates to work done before the policy start date, it CAN be covered if you have a Retroactive Date specified on your policy.
A Retroactive Date extends the policy cover back to that prior date, typically this is the start date of your business. Please see below an example:
- Policy start date: 1st June 2019
- Retractive date: 1st June 2010
- Policy covers claims made after 1st June 2019 where it relates to work done by you after 1st June 2010
Sometimes a policy will say “Retroactive date none”. This can be confusing. It means that the policy covers ALL work done in the past by the policyholder and makes the policy fully retroactive.
Retroactive cover can be added to your professional indemnity policy
This is necessary to your business, as it may not be immediately obvious that there may a problem with your work – it may take weeks, months or even years. Architects, surveyors and engineers are particularly prone to problems from years ago, as materials may deteriorate, values may decrease, and clients will look for someone to blame.
Because professional indemnity insurance is a ‘claims made’ policy, for claims to be made against you, and to be covered correctly, you have to be insured at two points, when do you did the work, and when the claim is made.
The great thing about retroactive cover is that you’re covered, even if you didn’t have insurance back when you should have.
How Do I Obtain Retroactive Cover?
When buying professional indemnity insurance for the first time, you will be asked if you’d like to cover past work. If you do, you will need to choose a date to go back to. It is recommended that this date should be when you started your first contract or set up your business.
If you are already insured, you can ask your broker or insurer if they can add retroactive cover to your policy mid-term. If you’re changing insurers at renewal, your new insurer should ask how long you have had continuous professional indemnity insurance for, or if you have a retroactive date. They should note this and take on the risk for that period.
Some insurers will include retroactive cover for free, some charge a one-off premium, and some won’t offer it at all. It depends on what your occupation is and how happy the insurer is to cover it.
If you would like to discuss retroactive cover with us, our team are more than happy to help. Please give us a call, or drop us an email, and a member of our team will be in touch.
Most types of insurance cover start from the date a policy is taken out, or the renewal date. They will then cover you for incidents that happen whilst that policy is in force. This is called a ‘Claims Occurring’ basis – i.e. you are covered for claims that occur whilst the policy is in force. If the incident related to a previous year then the claim would have to be passed to your previous Insurer.
A good example would be an Employers Liability policy – a claim could be made against a company now that related to an incident in the past, such as asbestos exposure or industrial hearing loss. The current liability policy would not cover this, it would have to be passed back to the Insurer who covered the business at the time of the incident. Most business insurance policies work like this.
If you would like to discuss retroactive cover, please contact us by calling or emailing a member of our team.