What is the significance of the retroactive date for a claims-made insurance policy?


The retroactive date is a key term for every liability insurance policy written on a claims-made basis. It stands for the provisional date that may be specified in a liability policy, after which losses must occur in order to be covered under a claims-made insurance policy.

The Retroactive Date and Claims-Made Insurance Policies

Very often the retroactive date coincides with the date of the inception of the policy. If that is the case, only loss occurrences that take place after the inception of the policy will be covered. However, with a claims-made insurance policy there is a possibility to specify a retroactive date preceding the date when the coverage comes into effect. In that situation, all claims which have occurred before the inception of the liability policy are covered, as long as they are reported during the policy term and provided that they have occurred after the retroactive date specified in the policy declarations.

Occurrence vs. Claims-Made Insurance Policy

When looking for a liability protection, it is important to be familiar with the distinction between occurrence and claims-made insurance policies. Typically, you will have to choose between the two forms. Here are the major differences between the two:

  • An occurrence insurance policy is a policy, which provides protection for claims on an occurrence basis, irrespective of the date a claim is made. The important prerequisite here is that the loss occurs within the policy period.
  • A claims-made insurance policy, in comparison, covers liability claims for incidents that are reported during the insurance policy period. The incidents might have occurred before the inception of the liability policy but only those that have occurred after the retroactive date specified in the policy declaration will be covered.

Claims-made policies also differ from occurrence policies in that they contain an "extended reporting period" clause. This extra provision includes two extended reporting periods, or tails: a sixty-day, or a five-year period after the end of the policy term.

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