Why is my Retroactive Date Important?

A retroactive date refers to the date from which your policy's coverage is effective for any incidents or claims. When you purchase a policy for the first time, your retroactive date is typically the same as the date your policy started. This date is especially crucial in claims-made professional liability or errors and omissions insurance policies. This means that any claim made for losses that occurred before the retroactive date will not be covered by the policy.

The significance of the retroactive date is that it determines the extent to which past incidents are covered by your policy. Claims-made insurance policies cover liability claims that are reported while your policy is active, even if the incident leading to the claim occurred years ago. But, the coverage is only effective if there's no lapse in the insurance coverage.

A key aspect to consider is that discontinuing your professional liability insurance policy, even momentarily, could potentially have severe financial implications down the line. If a claim arises from an incident that occurred during that coverage gap, the responsibility for the potentially hefty legal expenses might fall solely on you instead of your insurance company. Therefore, to ensure a continuous safety net, it's crucial to maintain uninterrupted insurance coverage.