On a claims-made policy, this is the date when coverage actually begins prior to the effective policy date. This is not required, and if it is included on a policy then claims made prior to the retroactive date will not be covered.
Understanding Retroactive Date Terms In Your Errors & Omissions Insurance
Errors & Omissions insurance is the coverage offered to architects and engineers that protects against losses resulting from errors and oversights during the provision of products and services. While general liability offers security against injuries that are sustained in your office, professional liability insurance or E&O insurance protects the work that you do. Understanding the retroactive date terms of the various policies offered by different insurers can help you attain a policy that is most desirable for your needs.
Professional liability insurance works on a claims-made basis. While most other forms of insurance will honor claims made after the policy’s ending date, so long as the event occurred while the policy was still in effect, professional liability does not. Claims must be made within the policies duration in order for the insurer to honor them.
There is the opportunity to have claims honored retroactively. A claim that is filed during the duration of the policy for an event that occurred before the policy was in effect will be honored. It is key to note that there must be no proof of prior knowledge of the event by the policyholder before the application date.
The retroactive date is the last date for which an insurer will honor claims. If the event occurs before this time it will not be honored when filed as a claim. There is however the opportunity for professionals to choose a policy that has what is called full prior acts coverage. This coverage will cover any act without a set retroactive date so long as the claim is filed during the duration of the policy.
It is helpful to have the assistance of a qualified broker when selecting your errors and omissions insurance provider. Getting covered is a huge investment in your business that will not only offer more protection, but will increase your appeal to potential clients.
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