Understanding The Importance Of Having A Retro Date

When taking over an account using a “Broker of Record Letter” or when placing a new professional liability policy, it is important that you determined if there is a retro date associated with the risk? One of the key factors that can impact whether a professional liability claim is covered involves the "retro date". Within a claims made policy, there are a variety of key triggers with the two main points being the date of the "wrongful act" and the date the claim is made. A claims-made policy only covers claims made during the policy period or if purchased any extended reporting period if applicable.

 The definition of a “Wrongful Act” is typically the act, error or omission that an insured commits that give rise to a claim. For coverage to apply, the date of the “error or omission” must occur after the retro date as stated in the policy. In other words, there is no coverage for any “Wrongful Act” that occurred prior to the retro date. Oftentimes, the alleged “error or omission” can occur months or even years before the claim is made and brought, therefore it is critical that when placing the policy that you secure coverage for all prior acts.

 If you are placing a policy for a new business then the “retro date” and the policy inception date of the first policy will be the same. As the policy renews or if you decide to move to another carrier then it’s important that you maintain the original retro date.

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