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Retroactive Insurance Cover – covering your past work

Posted on 3rd August 2018 by Donna Smith - Schemes Director

Retroactive Insurance

As a Freelancer, purchasing insurance can be confusing and intimidating. You will find many professional indemnity policies on the market all claiming to be the best. So how do you know which policy is the best and what you should be looking for?

As a minimum you should ensure that any PI insurance policy you purchase has full retroactive cover, ideally back to the date of establishment of your business.

When purchasing cover online please always check what the retroactive date of the cover is, and whether retroactive cover is included, as some insurance providers do not automatically include this level of cover.

Furthermore, some providers will charge you for this, others (like Caunce O’Hara) will include this within your premium for free.

Retroactive Insurance Cover

The last thing a business needs is a phone call out of the blue to say a claim is being brought against you for work you completed 5 years ago. That’s when retroactive cover can help.

What is retroactive insurance cover?

This ensures that the policy you purchase is covering you for all the past work your business has undertaken.

All professional indemnity policies are written on what is a called a ‘claims made’ basis. This means that when you have a potential claim, or are made aware of a possible claim, the claim will be picked up by the professional indemnity insurer who insures you when you are told of the claim, not who insured you when you did the work that is being claimed against.

For example, if you undertook project work 3 years ago and today someone advises you they have found an error in your work, that has caused them a financial loss, the claim would be picked up by the insurers you are on cover with today.

Hence why it is essential to ensure your PI insurance policy has full retroactive cover in place.

Some Insurers only cover you from the date you go on cover with them – meaning that if the above situation happened and an error was found in your past work, the insurer would decline the claim as they don’t have retroactive cover in place for you.

The reason you are purchasing insurance in the first instance, is to protect yourself and your business.

It is pointless paying for cover that does not fully protect you, your business and any past risk/exposure.

It is crucial that you take the time to purchase a policy that provides full cover and gives you that protection and peace-of-mind, so you can continue growing your business safe in the knowledge that any potential claims are going to be dealt with fully.

For further information about your professional indemnity insurance and retroactive cover, please contact our award-winning Schemes Team on 0333 321 1403


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