In a professional indemnity insurance policy, your insurer may agree to cover you from the date of the policy or for a certain period before the date you took out the policy.
What is the Retroactive Date for Professional Indemnity Insurance?
The retroactive date for professional indemnity insurance is the earliest possible date from which your insurer will cover you. They will not cover you for any claims that arise from before this date.
For example, say you take out a professional indemnity insurance policy in February 2022, but your insurer agrees to a retroactive date of February 2021.
This means they’ll cover you for any claims that arise dating from February 2021 onward – even though you technically did not have professional indemnity insurance cover until February 2022. However, they will not cover you for any claims that arise from before February 2021.
Retroactive Date and Uninterrupted Professional Indemnity Insurance
The retroactive date can also refer to the period for which you’ve had uninterrupted professional indemnity insurance cover. When you renew a policy, the renewal date will become your new “inception date”. But the day on which you first took out the policy will be your retroactive date. Insurers will still take on claims from before your renewal date.
Can You Backdate Professional Indemnity Insurance?
If you offer advice or professional services, then you should consider taking out a professional indemnity insurance policy as soon as you start trading. This way, you’ll always be covered for any mistakes you make in your work. You can read our full guide to the importance of professional indemnity insurance.
But some businesses trade for years before they realise the benefits that professional indemnity insurance can provide. Some business owners may worry about any claims arising from the period before they took our their policy.
The good news is that you can backdate insurance. Insurance policies start from the moment you take them out – the “inception date”. But when you take out a professional indemnity insurance policy, your insurer will usually ask you from which date you want the policy to run. If you choose an earlier date, this date can become your policy’s retroactive date.
When Can’t You Backdate Insurance?
If you request a retroactive date for your professional indemnity insurance policy, don’t be surprised if your insurer gets suspicious.
Imagine this scenario: A consultant does some work for a client and, for whatever reason, the client isn’t happy. The consultant might anticipate that the client will make a claim against them. Wary of having to pay legal fees and a settlement, they may decide to take out a professional indemnity insurance policy, so that they’ll be covered once the claim comes to pass.
The problem is that insurance is all about risk. Insurers provide cover on the basis that they may never have to make a pay-out. So if an insurer suspects that someone’s taking out a policy when they’re already expecting a claim, then it’s unlikely that they’ll provide cover.
In the scenario above, the consultant might succeed in getting a professional indemnity insurance policy. However, they might not be able to set a retroactive date. Instead, their policy will only provide cover from the inception date – the day on which the consultant decided to take out the policy.
But if it’s a genuine, honest mistake – if the consultant isn’t expecting a claim, and they’d simply not considered professional indemnity insurance before – then most insurers will be happy to set a retroactive date.
Yet the further back the retroactive date is from the inception date, the more risk the insurer’s taking on. As a result, retroactive dates can often push up the price of professional indemnity insurance policies.
Is Your Professional Indemnity Insurance Policy Giving You The Cover You Need?
Don’t take it for granted that you’ll be able to backdate your professional insurance policy. Talk to your insurer about your policy, to find out just how far back your policy stretches. So long as you’re not facing any claims, you might be able to come to an arrangement with your insurer about a new retroactive date – one that covers you from the moment you began trading.
Professional Indemnity Insurance for Freelancers
We offer professional indemnity insurance as a flexible and affordable add-on to our freelance and contractor insurance policies. Find out more about our professional indemnity insurance and get a free quote in minutes – you can get essential work cover for as little as £11 per month.
If you have any questions or would like to discuss your options please contact the Tapoly team at firstname.lastname@example.org, call our help line on +44(0)207 846 0108 or try our chat on our website.