If a claim is reported during the policy period (or any applicable reporting period), this option provides coverage prior to the inception date of the policy subject to the applicable retroactive date.
Under “Full Prior Acts” coverage, no retroactive date is necessary and the policy provides coverage for claims made during the policy period arising from past negligent acts, errors or omissions only if on the effective date of the policy to be issued, the insured client had no knowledge of such negligent acts, error or omissions or circumstances that might lead to a claim.
Prior Acts Coverage and Design Firms
Errors & Omissions insurance is the professional liability insurance that covers growing and established business from those issues that arise due to business functions but are not covered under general liability. Should a client or contractor sustain an injury on company property general liability is the insurance under which a claim would be filed. When there are design errors or omissions that result in a loss for a client however, general liability offers no protection, while Errors & Omissions does. In fact it is even possible to purchase a policy that covers those events that occurred before the inception of the policy via Prior Acts coverage.
Having this security is a huge advantage for a growing business. Not only is there extra padding in terms of maintaining lasting financial security, but there is also an enhanced reputation for your business. Many clients prefer to work with those firms that have the insurance to back their work should the unforeseen arise.
Prior Acts coverages takes care of those events that occur before the beginning of a policy as long as they are reported while the policy is in effect. Some insurers and plans set a specific retroactive date that the event must not have occurred before. However, there is the option to choose a policy that has no limitations on how retroactive the event may be. This is often termed “Full Prior Acts Coverage”.
Understanding the different terms and features of the various policies that can be found from the numerous providers can help you choose how to shop for the protection of your business. Often, having a reliable and reputable broker by your side can help you clearly focus on finding the terms and features that best suit your needs.
It is important to be assured of the financial stability of any insurance company that you choose. There should be a long running history that denotes worthy customer service and fair response to claims. Your investment in Errors & Omission insurance as well as Prior Acts coverage can protect from what you don’t know and what you should have known before.