Professional Indemnity Retroactive Date
A retroactive date in your insurance policy marks the beginning of your coverage. It's the date on which you purchased the Professional indemnity insurance policy for the first time and even if you changed the insurer and made sure that there is no gap between the end of the old policy and the beginning of the new one. Then the new insurer will provide coverage for any claims that might arise from the tenure of your old policy. Also, remember that any claims arising from incidents that occurred before this retroactive date are not covered by your insurance.
Let us consider an example to understand better.
* A Doctor purchased a professional indemnity insurance policy from XYZ Insurance Company on 1 January 2020.
* The policy expires on 31 December 2020.
* Since the Doctor did not like the coverage of the XYZ Insurance Company and decided to change the insurer.
* The Doctor makes sure that there is no gap between the Old and New Professional Indemnity Insurance policy.
* So purchase the new Professional indemnity insurance policy from the ABC Insurance Company, which comes into effect from 1 January 2021.
* 1 January 2021 becomes the new inception date and the old inception date, 1 January 2020, becomes the retroactive date.
* However, a claim arose when the Doctor was covered under the PI policy of XYZ Insurance Company dated 1 June 2020.
* Since there was no gap between the two policies, the current insurer, ABC Insurance Company, will provide coverage for the claim raised from the tenure of the old insurance policy.
Understanding Professional Indemnity Insurance
Professional indemnity insurance, also sometimes known as Errors & Omissions Insurance, is a common type of business insurance. This insurance indemnifies the professional or a service-providing firm if they commit some mistake, negligence or error within their professional paradigm. These errors may also lead them into legal trouble, thus professional liability insurance covers legal expenses. Generally, it covers the legal cost of defending the claim and the financial aid in paying compensation to the client who raised the claim.
The core importance of professional indemnity insurance includes:
- Mitigating the risk of litigation arising out of unintentional errors
- Lowering the chances of loss and risks, businesses or professionals may face
- Protecting professional’s assets and safeguarding the reputation of their practice
The professional indemnity retroactive date covers the work completed before buying an insurance cover. It is to be taken note that the claim arises after the mentioned retroactive date, and the policy is in place while making the claim. The retroactive date can be a technical term that not many people would be aware of, but it truly is an important aspect of professional indemnity insurance.