If you are looking for a professional indemnity insurance policy, then it is vital to ensure that your insurance will cover you for any claims that may be brought against you. The policy’s retroactive date can determine whether or not you are covered for certain claims.
In this post we will explain what a retroactive date is on a professional indemnity insurance policy, and why it matters.
What is a Professional Indemnity Insurance Retroactive Date?
This is the date from which your insurer has agreed to cover you. A professional indemnity insurance policy should specify a retroactive date. Usually, the policy will cover you from the date you took out the insurance. However, some policies may specify an earlier retroactive date, or a later one.
How Does Your Retroactive Date Affect Claims?
Your policy will only cover you for claims arising from work you have undertaken, or advice you have given, after this specified retroactive date. So, when you are taking out a professional indemnity policy, it is crucial to ensure the retroactive date either includes the date you started your business, or the date on which you started a project or contract which may arise in a claim.
Different Types of Retroactive Dates on Professional Indemnity Insurance Policies
Your insurer may refer to your retroactive date in a number of ways:
- Unlimited Retroactivity – This means that your policy will give you full retroactive cover. You will have cover for any claim you report during your policy period, even if the claim relates to work you carried out, or advice you gave, before you took out the policy. Unlimited retroactivity cover may also be referred to on your policy as “retroactive date: none”.
- Specified Retroactive Date – Alternatively, your policy may include a specific retroactive date. As we mentioned above, this means you will only have cover for claims arising from work you have undertaken, or advice you have given, after this specified date. You will not be covered for any work you undertook before this date.
- Retroactive Date Inception (RDI) – This simply means that your cover will commence from the date you took out the policy. You will not be covered for any work you began before you took out the policy.
Why Retroactive Dates Matter For New or When Switching Policies
You should be able to rely on your professional indemnity insurance policy to cover you for any claim your clients may make against you. A specified retroactive date, or an RDI policy, will be fine if your business is just starting out, or if you are getting cover for a specific contract or project.
However, if you are switching policies, or if you are purchasing PI insurance for the first time, then it is important to ensure that there are no gaps in your cover.
Alternative Retroactive Clause, and Avoiding Gaps in PI Cover
Some insurers are a bit more specific with their retroactive date clauses. They may specify that the retroactive date is the earlier date of:
- The date you first purchased this specific policy.
- The retroactive date specified on the PI insurance policy you had previous to taking out this specific policy.
In short, this means that the insurer expects you to provide evidence that you had professional indemnity insurance in place since you started trading. If you cannot provide this evidence, then your retroactive date will simply be the date you took out insurance from your current provider. This means they will not cover you for any claims arising from before this policy period.
You can contact your previous providers for evidence of your previous policies. But if this is your first PI policy, or if there are gaps in your cover, you can ask your current provider for an earlier retroactive date, or for unlimited retroactivity. Just bear in mind that this may result in higher premiums, and there may also be a one-off premium payment for this policy adjustment.
We Can Help You Ensure Your PI Insurance Covers You For All Claims
James Hallam is an independent Lloyd’s broker with a dedicated team of experienced insurance professionals who care about protecting your business.
Whether you are just starting out, or you are looking to switch providers, we can help you ensure that your PI insurance covers you for any claim that may be made against you, even if the claim is relating to work you commenced before you took out the insurance.