Which terms should you accept?
Most professional indemnity policies will include a retroactive date, which is the date from which you purchased uninterrupted professional indemnity cover or the date from which your insurer agreed to cover you.
Any claims arising from work undertaken or advice given before this retroactive date will not be covered by your insurer. It is therefore important that your retroactive date is also the date that you started practising. This ensures that all the work you have completed in the past will be covered by your professional indemnity policy.
The retroactive date is usually shown on your policy schedule or by way of an endorsement and can be referred to in several ways:
Unlimited retroactivity or retroactive date – none
If either of these are specified on a policy, it means you have full retroactive cover and will respond to a claim that is reported to the insurer during the policy period, regardless of when the work was undertaken or the advice given.
Both the above terms will cover all your past work.
Specified retroactive date, eg retroactive date: 9 June 2009
This would mean that any work that was undertaken before 9 June 2009 is excluded from your policy. If the retroactive date specified is later than the date you started to practise, you can ask your insurer to change it. Please note that they may require a one-off premium charge to do so.
Retroactive date inception (RDI)
This means any work undertaken or advice given before the start date of your policy will not be covered. This is only acceptable if you are just starting to practise and have not undertaken any work in the past. Some insurers will apply RDI if there has been a gap in cover. It is possible to remedy this by asking your insurer to apply the correct date, though they will probably charge a one-off premium to do this.
Some insurers may apply the following Retroactive date clause which may include the following wording – '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 puts the onus on you, the insured, to prove that you have had insurance in place since you started trading. If you do not have evidence of preceding policies, your retroactive date will be the date you took out insurance with your current insurer and this may not be compliant with ACCA regulations. Alternatively, you could contact your previous insurers for copies of your earlier policies, but they may well charge an administration fee for providing copies.
When you are renewing your professional indemnity insurance, and especially if you are changing insurer or broker, it is important to check the retroactive date is accurate. Also, be aware that there are insurance providers who will offer very competitive premiums with 'retroactive date inception' terms. In this case, the premium is only attractive because none of your past work will be covered and there is little risk to the insurer.