Glossary
Retroactive date, defined
The point in time, printed on the declarations of a claims-made policy, before which acts, errors or omissions are not covered no matter when the claim arrives.
In practice
It is typically set at the day the insured first bought continuous claims-made coverage and carried forward at each renewal or change of carrier. Letting it advance to the current day, which a new carrier may offer in exchange for a lower premium, wipes out coverage for every earlier year's work. Ask for full prior acts, meaning the original date is preserved. A gap in coverage usually resets it; a lapse of even a few weeks can cost years of protection. Check it on every renewal and on every quote from a competing carrier.
A worked example
Suppose an accountant has held claims-made coverage since a start date in year one and switches carriers in year six. The new quote sets the date at year six. If a year-four tax return is challenged in year seven, the new policy declines because the act predates its date. Suppose instead the accountant insisted the year-one date be carried over; the claim is covered. Hypothetical.
Applies to: Professional Liability (E&O) Insurance