Call Us Today For A Free Quote | 866.940.1101
Professionals Insuring Professionals
 

Claims made insurance policies are designed to provide coverage for covered acts that a claim is made and reported during the policy period.  An unendorsed claims made policy generally only provides coverage for the current policy term for covered acts that occurred during the policy period and where the claim is made and reported during that term.  An unendorsed claims made policy provides no further coverage once the coverage has lapsed.   This can be a big problem if the covered error is discovered and then reported after the policy expires.  There are 2 options to resolve this issue:

1.       Purchase an Extended Reporting Period Endorsement (ERP or Tail) at the end of each policy term.  Cumbersome and potentially expensive, at least in the short run.

2.       Have subsequent claims made insurance policies endorsed with a prior acts or retroactive date that provides coverage for acts that occurred prior to the current policy period.

By convention, the generally accepted method of extending claims made coverage beyond the current policy year is through the use of a prior acts or retroactive date.

During the 1st year of claims made coverage the policy is issued with a prior acts date that equals the inception date of coverage.  With a policy that the Prior Acts Date equals the Policy Effective Date there is no coverage for any acts that occurred prior to the effective date of the current policy even if reported during the policy period.  This 1st claims made policy is referred to as a retro date inception (RDI) policy.

At subsequent anniversary dates, the renewal policy needs to maintain the prior acts date that was established at the inception date of coverage.  If this date is changed than the insurance coverage is leaving open covered acts that are potentially uninsured.  It is very important to maintain your Prior Acts Date once established to prevent coverage gaps.  Unfortunately, either through carelessness or deliberately, to lower the price we continue to see competitive renewal offerings where the prior acts date has been shorted.  In the most extreme cases, the coverage offered is another RDI policy that wipes out coverage for all past acts.  An RDI policy is significantly cheaper than a “fully rated policy” with prior acts coverage because it offers no protection for past acts coverage.   

If coverage is shorted, once put in place, if the error is not discovered almost immediately, it is very difficult and expensive to get prior acts coverage back.

One way to prevent having your prior acts date changed is to work with a trusted agency that is familiar with claims made insurance coverage.  Most insurance agencies rarely work with claims made insurance coverage.  While they might be an expert in homeowners and a good golfer, they may not be the best choice to properly write a claims made insurance policy.

L Squared Insurance Agency LLC specializes in professional liability insurance claims made insurance policies.  If you have a problem a question about claims made coverage let us know.  We will be happy to help you.

 

 

Note:  The above is general information about a Claims Made Insurance policy concept.  Different insurance policies and different situations may or may not treat these concepts in a similar manner.

Share |


No Comments


Post a Comment
Name
Required
E-Mail
Required (Not Displayed)
Comment
Required


All comments are moderated and stripped of HTML.
Submission Validation
Required
CAPTCHA
Change the CAPTCHA codeSpeak the CAPTCHA code
 
Enter the Validation Code from above.
NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive


View Mobile Version
Quick Contact
Referrals
We love referrals! And thank you even more for your continued business.
Customer Service
Self policy service any time of the day, directly from our website.
Join Our Newsletter
Stay in touch with the latest events, news and offers we have.
From Our Blog From Our Customers
Read More Read More
Stay In Touch With Us Helpful Site Links Read the News
Sign up now to receive new and updates Stay up-to-date with the latest industry, community and agency news through our newscenter. We also provide handy hints on how to save on your insurance.

Read More
We have the expertise to find you the right coverage at the right price 
Powered by Insurance Website Builder