Professional indemnity insurance retroactive dates

The retroactive date is a key feature of any professional indemnity insurance (PII) policy. Depending on its wording, you may, or may not, be covered for your past work. In this article, we explain what your retroactive date is, what it means for your coverage, and the key considerations when it comes to renewal. 

What is a retroactive date?

Simply, a retroactive date is the date from which your insurer agreed to provide your cover. Often, this is the date from which you purchased your insurance, although it may also be earlier or later. 

Most PII policies will include a retroactive date. Any claims arising from work undertaken or advice given before this retroactive date will not be covered by your insurer. As a result, it’s crucial that your retroactive date includes the date that you started practising. This will ensure that all your past work is covered by your PII policy. 

Different types of retroactive date

The retroactive date is usually either shown on your policy schedule, or by way of an endorsement (an amendment to your insurance contract). It can be referred to in several ways:

• ‘Unlimited retroactivity’ or ‘retroactive date: none’: if your policy specifies either of these terms, it means you have full retroactive cover. Your PII will respond to a claim that is reported during the policy period, regardless of when the work was undertaken, or when the advice was given.
• ‘Specified retroactive date’ (eg retroactive date: 9 June 2009): if your policy incudes a specific retroactive date, you are covered for any work undertaken after that date. Work undertaken prior to that date is excluded. If the retroactive date specified is later than the date you started to practise, you can ask your insurer to apply the correct date. However, any change may incur a one-off premium charge.
• ‘Retroactive date inception (RDI)’ means that you will not be covered for any work undertaken or advice given before the start date of your policy. A policy with this wording is only suitable for firms who are just starting to practise, and who have not undertaken any prior work. Crucially, some insurers may apply an RDI as standard if there has been a gap in cover. It is possible to remedy this by asking your insurer to apply the correct date. However, any change may incur a one-off premium charge.

Alternative retroactive clauses

If your policy schedule doesn’t include any of the above, it’s possible that you have an alternative retroactive date wording.

An alternative clause that’s often applied by insurers in relation to the retroactive date is:

‘the earlier of (a) the inception date of the first period of insurance in which this certificate was effective, or (b) the retroactive date of the policy or certificate of insurance in force immediately before the inception date of the first period of insurance in which this certificate was effective’.

This type of clause places the onus on you, the policyholder, to prove that you had insurance in place since you began trading. Without this evidence, your retroactive date will be the date you took out insurance with your current provider. If this is after the date you began trading, it may not be compliant with ACCA regulations.

Checking your retroactive date

If you have the clause above, but do not have evidence of your earlier policies, contact your previous insurers for copies. They may charge an administration fee to cover the cost of providing it to you.

However, regardless of the wording in your policy, it’s crucial to review your PII carefully and the retroactive date included whenever you are renewing your insurance. This is especially the case if you are changing insurer or broker.

You should also exercise caution whenever you see insurance providers offering very competitive premiums, as these are likely to be ‘retroactive date inception’ terms. Remember that these policies do not cover your past work.

For further insights, visit Lockton’s Accountants page.

Lockton is ACCA’s recommended broker for professional indemnity insurance.

Further resources

Read ACCA's guidance factsheet on professional indemnity insurance requirements

Read ACCA's Rulebook changes in relation to PII