Retroactive Date – LIABILITY Policies

 

Retroactive Date – Liability  Policies

When you buy liability insurance you have to choose whether it is claims made policy or occurrence based policy. The term Claims made policy is less understood in Liability policies. To the insured it appears confusing when suggested by the Insurer.

Claims-made policy provides coverage for a claim that is triggered when a claim is made against the insured during the policy period, regardless of when the wrongful act that gave rise to the claim took place.

Now the Retroactive date comes into the fore.

Retroactive date is the date when coverage/risk is first incepted under a liability policy i.e. the date of commencement of the first policy. It is an essential feature of claims made policy.

There are two options to choose under a liability policy:

·       Occurrence based policy.

·       Claims made policy.

·       An occurrence policy offers lifetime coverage for incidents that occur during the policy period, regardless of when the claim is reported.

·       A claims-made policy covers incidents that occur and are reported within the policy's time frame i.e period of insurance.

Under a claims made policy the Retroactive date and Extended claims reporting clause are two important features. We will now look into the details of these features.

 

Retroactive date: policy provides coverage if an incident occurs on or after a specified date.

Example:

Retroactive Date:  12.12.2020

Policy period      : 12.12.2021 to 11.12.2022

Period of Insurance: will be from 12.12.2020 to 11.12.2022

Hence the continuous coverage, provided the policy is renewed without break.Any claim during the period of Insurance is admitted i.e. all claims which could not be reported immediately or discovered can be claimed and insurer is on cover for the period.

Supposing the policy expires and is not renewed within time then choosing the

Extended Claim Reporting clause provides the time limit to file a claim.

 

Extended Claim Reporting Clause helps cover claims made during a specified time after your policy expires. Generally, it lasts between 30 and 60 days.

Example:

Policy expires on 11.12.2022

Extending Claim reporting 30 days or 60 days as agreed.

Claim can be notified up to 10.01.2023(30 days)

Claim can be notified up to 10.02.2023(60 days)

 

It's important to remember that a claims-made policy covers your business only if the claim is: 

 

Ø  Filed during your policy period or within your extended reporting period

Ø  For a loss occurring on or after your retroactive date

 

Ø  For losses or incidents that happened before your policy started, your insurance company won’t provide coverage.

 

 

Awareness of the terminology while purchasing insurance is significant as most of the cover detail is lost in fine prints, terms & conditions. A proper understanding of Insurance will enable one buy the rights cover at the correct premium rates.

We at Zen Insurance have the right expertise and can assist you in customizing a suitable policy that covers your liability. Plan your Insurance cover and contact us for assistance.

 Disclaimer:   

Zen Insurance is an IRDAI registered broker which facilitates quick & accurate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products.