Errors and omissions policies are a weird combination of claims-made and occurrence-made policies. The claim must be made within the policy period of the professional liability policy and the occurrence that gives rise to the claim must be brought within the policy period or within the period of your retroactive date.
If the occurrence that gives rise to the claim is not within the policy period of coverage and occurred before the retroactive date of your policy, you have no coverage. In this scenario, your professional liability policy provides no coverage and is essentially worthless.
If the policy period for your professional liability policy is July 10, 2023, to July 10, 2024, and the retroactive date of the policy is July 10, 2022 (one year before the policy period), you are exposed to a major gap in coverage. Your insurance policy will only provide coverage for claims made during the policy period (July 10, 2023, to July 10, 2024), where the occurrence that forms the basis for the claim occurred no later than July 10, 2022 (the retroactive date).
With most legal malpractice claims, there is a significant period of time between the occurrence that forms the basis for the claim and the filing of a claim. The time between the occurrence and the claim can be as long as 2-5 years. If the retroactive date of your policy only extends one year prior to the beginning of the policy period, you may not have insurance coverage for the majority of claims.
A Simple Solution to Avoid a Gap in Coverage
The retroactive date for your professional liability policy should extend back to the date that you opened your law firm. If you opened your law firm on March 14, 2013, then the retroactive date of your policy should be March 14, 2013. With a retroactive date that extends back to the date that you opened your firm, you will be covered regardless of the date of the occurrence that forms the basis for the claim.
Check the declarations page of your professional liability policy and specifically check the retroactive date. If the retroactive date does not extend back to the date that you opened your law firm, you should call your insurance broker to request a change in your coverage immediately. Tell your broker that you insist upon a retroactive date that extends to the date that you opened your law firm. Do not accept anything less.
You should not wait for the next renewal period to change your coverage. If a claim is brought before the renewal period, you may not have coverage. This is the most important thing you can do to make sure your professional liability policy will protect you in the event of a claim.
