Retroactive date
What it means
The retroactive date on a claims-made policy is the earliest date of past work the policy will respond to. Work performed before that date is outside cover even if the claim arrives while the policy is current.
A policy with unlimited retroactivity reaches back over all prior work. A policy with a retroactive date set at inception covers nothing that happened before the business first took out cover.
Also called: retroactive date, retro date, retroactivity
Where you meet it
- Professional indemnity schedules, where it appears as a date instead of a clause.
- Management liability wordings covering prior acts of directors and officers.
- Quotations from a new insurer at renewal, where the offered date can differ from the expiring one.
- Contract insurance clauses for consultants, which sometimes specify retroactive cover for the whole period of past engagement.
- Run-off arrangements, where the retroactive date and the run-off period together decide what past work remains covered.
Worked example
A consultancy has held continuous professional indemnity cover for years with unlimited retroactivity. It moves to a cheaper insurer whose quotation sets the retroactive date at the inception of the new policy.
Every project completed before that date has just become uninsured for future claims. The premium saving is real and so is the gap, and the two are not comparable until the retroactive date on each quotation is read.
What goes wrong with it
- Comparing professional indemnity quotations on premium alone is unsafe without checking the retroactive date on each.
- Any gap in cover can reset the date. Letting a policy lapse and re-buying later is not the same as renewing.
- A certificate of currency does not usually show the retroactive date. Ask for the schedule when the date matters.
- A contract can require unlimited retroactivity. Where it does, a policy with a dated retroactive cover position does not comply, and the gap is not visible on a certificate.
- The date is negotiable at placement. An insurer taking over a book of continuous cover will often match the expiring retroactive date if asked, and asking costs nothing.
Covers this clause appears in
- Professional indemnity insurance — Cover for legal liability arising from professional advice or services, written on a claims-made basis.
Related clauses
Guides that use this
Sources
On any specific policy, the wording and the schedule govern — they are the primary source for what a clause means there. The references below are general guidance to check against, cited at the publisher level.
- Moneysmart (ASIC) — General guidance on business insurance from the regulator’s consumer site. A starting point, not a definition of this clause.