Understanding the Retroactive Date in Your Legal Malpractice Policy

A “retroactive date” (or “retro date” for short) is a feature of claims-made coverage, which is the only type of lawyer’s professional liability (LPL) insurance available in the market today.

Nearly all LPL policies include a retroactive date. Only policy-period claims arising out of acts and omissions occurring after the retroactive date are covered. You want a retroactive date as far back as possible, ideally from the beginning of your private-practice career or start of the firm in its earliest iteration.

When your retroactive date precedes the policy inception date, you have “prior acts coverage.” When your retroactive date goes all the way back to when you started practicing law, it is called “full prior acts coverage” or “career coverage.” If your retroactive date is the same as the policy inception date, it is called a “first year” policy.

Normally the earliest retroactive date you can get is the beginning of continuous coverage. If you go naked for a period, and then resume coverage, your retroactive date will be reset to the inception date of the resumption policy. An insurer will not retroactively insure into a coverage gap.

When you switch carriers, your retroactive date is usually qualified by a knowledge condition: for claims arising out of acts and omissions preceding inception of the new-carrier policy, you are only covered if you did not have actual or constructive knowledge that a claim was likely. If there was cause to foresee a claim, the new carrier will not cover it, even though it arises out of post-retro events. This is the reason for reporting any known potential claims to your existing carrier before switching.

Your retroactive date may also be reset when you change law firms. Sometimes the new firm’s carrier will only cover the lateral attorney for acts and omissions after he or she joined the firm. If this is the case, you need to look into whether you are adequately covered under your old firm’s policy for prior acts and, if not, consider buying tail coverage.

The other circumstance in which a retroactive date may be reset is to overcome bad claim experience. A carrier may only be willing to insure you under a first-year policy with no prior acts coverage, in which case you will need to purchase tail coverage for prior acts.