Professional Indemnity Retroactive Dates

When arranging your Professional Indemnity insurance you should take extra care to ensure that the policy schedule shows the correct Retroactive date. We explain why below.

A Retroactive date means that a Professional Indemnity policy can provide cover for work you have done in the past

There are two dates that are relevant for a Professional Indemnity policy. The first is the inception date (or renewal date) of the policy. This is the start date of the policy period. The second is the Retroactive date, being the date that cover operates back to.  

To explain how the cover operates, it is important to understand that Professional Indemnity policies are written on what is called a 'claims made' basis. This means that they provide cover for claims made against you during the policy period (ie after the inception or renewal date) that relate to work that you have done at any time after the Retroactive date.

For example; A company has a professional indemnity policy that they renew on the 1st January 2010. The policy has a Retroactive date of 1st January 2002. They would be covered for claims made against them after 1st January 2010 for any work that they have done since 1st January 2002.

How do you determine the relevant Retroactive date?

Normally the Retroactive date is set to correspond with the date that the business was established, to provide cover for work done since the company began trading. In the case of a new startup business, the date is often set to be the same as the inception date of the first policy that is purchased. So, a business starting on 1st Jan 2010 and buying a policy 1st Feb 2010 would generally have a retroactive date of 1st February. This matching of dates is referred to as 'retro inception', ie the retroactive date is set to be the same as the inception date of the policy.

However the advent of online systems (such as ours, here) allow a business (including new startups) to select and purchase a policy where the retroacive date is shown as 'none'. Where the retroactive date is shown as such this means that there is no prior time limit for work undertaken in the past. Therefore, the policyholder would be covered for all claims made against them during their policy period that related to work undertaken by them at any time in the past (for the business shown on the schedule). Accordingly, where the schedule shows 'none' against the retroactive date section, this provides the widest cover in this respect.

You should therefore ensure that your professional indemnity policy accuratley specifies the relevant retroactive date for your business. Without a date being specified (or 'none') you will only be covered for claims made during the policy period and relating to work that occurs after the inception date of the policy.

Further Information

As always, please refer to your individual policy documentation, or feel free to contact us for further information.