What is Errors and Omissions Insurance Retroactive Coverage?

The policy Retroactive (or Prior Acts) date is arguably the most valuable portion of an E&O Insurance policy. It is the date in which you first purchased and maintained current, continuous coverage. It is also the date back to which a transaction could have occurred in order to be covered under your current policy. This is your errors and omissions insurance retroactive coverage.

Unlike other types of insurance, E&O policies are claims-made policies. This means that you must have current, continuous coverage in force to report claims and the claim must be reported during the policy period. If a policy lapses, all retroactive coverage will be lost. This means there will be no coverage for any transactions – even if coverage was in place at the time of the transaction.

Options are available for individuals and firms who retire or close/sell their company. It is important to speak to your insurance professional about these situations prior to occurrence so they may advise you how to proceed to ensure coverage is not lost.