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

Claims Made Insurance PolicyProfessional Liability Insurance policies are normally written on a ‘claims-made’ policy form.  In its purest form, an unendorsed ‘claims-made’ policy only provides coverage for the current policy term for covered acts that occurred during and where the claim is made and reported during that policy term.  For professionals this is unworkable as many claims are discovered after the end of the current policy term. 

Professional liability insurance policies will have a Retro-Active date or Prior-Acts date shown on the declarations page, in the policy itself or by endorsement.  Some policies are Full Prior Acts (FPA).  FPA is a ‘claims-made’ liability policy that does not contain a retroactive date (either by endorsement or policy language) and therefore covers claims arising from covered acts that took place back to the inception date of ‘claims-made’ coverage for the entity — regardless of how far in the past.   The claims-made policy may explicitly state FPA, or it may be implicit in the policy language.  Care needs to be taken because not all FPA endorsements are created equal. (See When is FPA not FPA)

So how does this work?

For example, assume that an insured has a ‘claims-made’ policy that includes a January 1, 2000, retroactive date and a January 1, 2016–17, term.  If a claim is made against the insured on July 1, 2016, and the claim arose from a covered act that took place on January 1, 1998, there would be no coverage under the policy. This is because the covered act took place prior to the January 1, 2000, retroactive date.

Now assume that this insured has a policy written with the same January 1, 2016–17, policy term, but the policy contains a FPA endorsement or is FPA by policy language.  If a claim were made against the insured on July 1, 2016, from a covered act that took place on January 1, 1998, coverage would apply. In fact coverage would apply regardless of how far in the past a covered act took place, the claim will be covered (as long as the claim is made against the insured and reported to the insurer during the policy period that the act first became known).

To get FPA coverage normally the applicant already has had FPA coverage in place at the time it submits an application for renewal.  Note some insurers do not provide FPA, but will go back to the inception date of 1st coverage.  Insurers will not provide FPA coverage to insureds that have not maintained continuous claims made coverage back to the inception date of 1st coverage.  Insurers do not want to end up ‘buying’ claims for past acts where no prior claims-made coverage was in place.

Make sure to head over to our Common Terms section to review this and other important professional liability insurance terms.

Share |

No Comments

Post a Comment
Required (Not Displayed)

All comments are moderated and stripped of HTML.
Submission Validation
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
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