Accountants Errors & Omissions and Attorney Malpractice insurance policies may have a Firm Prior Acts Date, an Individual Prior Acts Date, a Career Coverage Prior Acts Date and/or Predecessor
Firm Prior Acts Date. Each can be used to address specific coverage needs:
1. Firm Prior Acts – As the name implies it covers work on behalf of the named insured firm after a specified date. This can be an actual date or may state ‘Full Prior Acts’. For some insurers their policy assumes ‘Full Prior Acts’, unless endorsed.
2. Individual Prior Acts—Individual prior acts dates may restrict coverage for individual accountants or attorneys (professionals) to the start date with the firm. After this date coverage for covered work on behalf of the named insured firm is provided. Not every professional in the firm may have an individual prior acts date. If the professional does not have an individual prior acts date, the assumption is that start date with the named insured firm or that the inception date of coverage falls under the firm prior acts date.
3. Career Coverage—An professional with a career coverage endorsement has a prior date acts date that likely precedes that professional’s start date with the firm. It may also precede the inception date of the firm’s claims made continuous coverage. With career coverage the professional has coverage for work that the professional has done prior to association with the current named insured firm. One should not confuse this coverage with predecessor firm prior acts. Predecessor firm Prior Acts is primary coverage that covers work done on behalf of the predecessor firm where as career coverage provides secondary coverage only for the individually named professional.
4. Predecessor Firm Prior Acts–If the current firm had a ‘predecessor’ firm it normally should be addressed by endorsement in the current firm’s policy. This is important in that coverage for the ‘predecessor’ firm likely precedes the formation of the current firm and the Firm Prior Acts Date. Without the policy being properly endorsed, claims that precede the current Firm Prior Acts Date may not be covered. If the predecessor firm is named in an action without being properly endorsement there may be no coverage. Wording and definitions for a ‘predecessor’ firm varies between insurers. Great care needs to be taken if switching insurers with this endorsement attached.
When changing from one malpractice insurance insurer to another it is very important that all of the above prior acts dates are maintained in a renewal policy with a new insurer. If these coverages are dropped or changed at renewal, the firm will settle on the new claims made coverage form with the new prior acts dates.
When looking to change or renew malpractice coverage it is important to have an insurance agency that specializes in malpractice insurance. Not properly addressing prior acts at the time policy forms are changed can leave a firm open to uncovered malpractice claims.
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.
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Lee Norcross, MBA, CPCU Managing Director, CEO (616) 940-1101 Ext. 7080 |
