Retroactive Insurance

Retroactive Insurance Cover – covering your past work

Posted on 3rd August 2018 by

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, whereas Caunce O’Hara includes this within your premium.

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.

Here are five key points to consider when reviewing your insurance needs:

Food for thought

Thinking of cancelling your policy? Or fancy switching? Do remember that Professional Indemnity policies are written on a claims made basis. When you are the subject of a claim, or a claim is alleged, the insurer that you have an active policy with is the insurer who will pick up that claim. So, whether you decide to cancel your policy, or move provider, please do check that retroactive cover is included and what the cost may be for adding cover for past work. This will save any future hardship for you and your business.

Protection for the past

Retroactive cover will protect you for any work or contracts you may have undertaken in the past, therefore giving you peace of mind for the future. It is one of the most important things to look for when purchasing Professional Indemnity insurance. You wouldn’t want a call in three years’ time to find you are liable for the collapse of a building due to your structural calculations being incorrect.

In between contracts

If you have just completed a contract, you may think you no longer need your insurance until your next job. Some freelance contractors, after they have signed off their latest contract, call to cancel their Professional Indemnity insurance as they have no other work lined up. At this stage it’s important to think of your past exposure and if it’s worth the risk of being without insurance.

With Caunce O’Hara it’s free with your PI policy

One of the many benefits of having Professional Indemnity insurance with Caunce O’Hara is that retroactive cover is included in your policy free of charge. This cover is backdated all the way to the date you established your business. Meaning that whilst your policy is active with ourselves you are being taken care of, and can trust that we will be here to keep you safe, if past errors come back to haunt you.

Shutting up shop

You have decided to close your business and your contracts are complete.  But, does that really mean it’s all over? Unfortunately, not; depending on the work completed and the terms of your contract you are still liable for mistakes you may have made that could cause your previous clients a financial loss. Many mistakes aren’t discovered immediately, they can be found months or even years after your contract has ended and you have closed your business.

This is where run-off cover comes in handy. Run off cover can be a contractual requirement after your contract has ended. It is an additional security blanket for your future, it will protect you if any future Professional Indemnity claims arise once your business has ceased trading.  By leaving yourself open to a potential claim in the future you as an individual could be liable for the cost of solicitor’s fees, damages and potential compensation awards; which would have to all be paid out of your own back pocket.

For further information about your professional indemnity insurance and retroactive cover, please contact 0333 321 1403


Please consult your professional indemnity policy document for full details about retroactive cover.


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