What is a retroactive date and why is it important?

The retroactive date is an incredibly important function part of a claims-made policy. It is critical to understand the impact the retroactive date can have on your coverage and protect you for your exposures.

What is a Retroactive Date?

An E&O / Professional Liability insurance policy is written on a claims-made basis, which allows the policyholder to notify the insurer of a claim for a wrongful act committed 1) during the policy period or 2) on or after the retroactive date. The retroactive date establishes the point in time from when forward a wrongful act is covered. 

Typically, a duration of time passes from when you, as a professional, commit a negligent act, error, or omission in the service or advice provided to your client to the client suffering a financial loss and holding you liable. The retroactive date is a feature to allow the current policy to respond even if the wrongful act is committed during a prior policy period.

Why is the Retroactive Date important?

The retroactive date is a critical coverage feature as it allows the policyholder to notify the insurer of a claim for a wrongful act committed prior to the current policy period.

Any claim for a wrongful act committed prior to the retroactive date is excluded.