If you have Professional Indemnity, Directors’ & Officers’ Liability, or Cyber & Data insurance, there’s a chance you’ll have spotted something on your policy schedule called a ‘retroactive date’. But what exactly is it?
Here, we provide the answer to that question, and highlight all the key details you need to know.
What is a retroactive date?
A retroactive date usually reflects the date you first took out a specific type of insurance. If you review your Professional Indemnity documentation for example, you’ll likely see that the retroactive date corresponds with when you started that policy – whether it was last year or ten years ago.
It’s industry practice for a new insurer to match the retroactive date on a previous policy, so even if you’ve changed providers over the years, it shouldn’t be affected. The only exception would normally be if you weren’t insured for a period of time, as the date would generally reset to reflect when the cover was purchased again.
Why is it important?
Your retroactive date determines how far back a policy can cover you for should a claim be made. Let’s consider the following example:
Imagine you’re a web designer who delivered a website for a client last year. You’ve since changed insurers due to better terms, but your new provider matched the retroactive date on the policy. Six months after switching, the client gets in touch claiming the website isn’t working as it should be. They threaten legal action and trigger your insurance policy.
In this instance, the retroactive date is prior to the work being completed, so the policy can respond to the claim made during the new period of insurance.
Can a retroactive date be backdated?
Over the years, insurers have been fairly accommodating to requests to backdate retroactive dates. But with the insurance market in its current state of flux, it’s becoming increasingly more difficult. This is because the types of insurance on a claims-made basis are those that are suffering the most right now, such as Directors’ & Officers’ Liability.
Though that’s not to say you can’t try. If you’re looking to take out a new policy and want to backdate the retroactive date, speak to your insurer or broker – but be prepared to be refused. And if they do agree, be ready for an additional premium and a signed no claims declaration.
Guidance from RiskBox
We understand that insurance isn’t always the easiest thing to wrap your head around, especially when it includes terms that you might not have heard before. That’s why we want to help. If you have a question about anything we’ve covered above, our friendly team has the answer.
Get in touch with us today on 0161 533 0411. Alternatively, you can email us at email@example.com or fill in our online contact form and we’ll get straight back to you.
Agencies - September 25, 2023
Blog - September 11, 2023