What is a retroactive date on professional indemnity insurance?

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The retroactive date on your professional indemnity insurance is the date from which you’ve held uninterrupted professional indemnity insurance, or a date in the past from which your insurer has agreed to cover you. Anything that happened before the retroactive date isn’t covered by your insurance.

Professional indemnity insurance - retroactive date

The retroactive date on your professional indemnity insurance is usually the date from which you’ve held uninterrupted professional indemnity insurance, even if you’ve switched insurers during this time. Anything that happened before the retroactive date usually won’t be covered by your insurance.

The retroactive date is important, because in order for a professional indemnity insurance claim to be covered by your insurer, your insurance needs to be in place both when the insured event happened, and when you make the claim.

Inception date vs retroactive date

If you take out a new policy when your previous policy ends, the start date of your new policy is the ‘inception date’, but the retroactive date is the date that you first took out professional indemnity insurance (if you haven’t had a break in cover).

If there’s a period when you don’t have any professional indemnity insurance, a claim for an event that took place during this period is likely to be declined by your insurer, even if you have insurance when you make the claim.

It’s quite likely that there could be a delay between you completing work and your client pursuing you for compensation, because it can take a while for mistakes to come to light.

For example, you work as a freelance graphic designer, and you take out professional indemnity insurance when you work on a six month project for client A. When the contract finishes, you begin working for client B, and you cancel your policy. A few months later, you take out professional indemnity insurance again, as your latest client (C) requires you to have it. You then receive a letter from client B saying that they’re suing you for a copyright breach. When you contact your insurer, they tell you that as you weren’t covered when you completed the work in question, they can’t pay your claim.

Adding a retroactive date to a new professional indemnity insurance policy

If you’re taking out professional indemnity insurance and you’re keen to cover work that you completed previously, some insurers will let you add an earlier retroactive date to your policy. For example, you could take out your first professional indemnity policy on 1 August 2017, but agree a retroactive date of 1 January 2017, when you first began doing self-employed work.

The retroactive cover means that work you completed before you took out your insurance policy can be covered by your professional indemnity insurance, as long as it was undertaken after the retroactive date, and the policy is in place when you make the claim. However, there’s no guarantee that this option will be available to you - it depends on the insurer, the type of business you run and your individual circumstances. Bear in mind that the insurer won’t agree to an earlier retroactive date if they believe you’re expecting to face a claim for previous work.

If you’re buying your professional indemnity insurance from Simply Business, you’ll need to give us a call if you want a retroactive date that’s earlier than your policy start date, as you can’t request this online.

Your retroactive date will usually be shown on your professional indemnity policy schedule.

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