Your Retroactive Date Is the Most Important Number on Your Policy

Almost every professional liability policy is written on a claims-made basis. That phrase does a lot of quiet work. It means the policy responds to claims MADE during the policy period — but only for work you did on or after a specific date. That date is your retroactive date, and it sits on your declarations page in small type.

Here is what it means in practice. Say you have been consulting since 2019 and you buy your first policy today with a retroactive date of today. A client sues you next year over advice you gave in 2022. The claim is made while your policy is live — but the work predates your retroactive date, so it is not covered. Six years of practice sit outside the policy.

This is why moving a retroactive date backwards matters, and why it usually costs less than people expect. Buying back prior years is priced as a modest step-up rather than as a whole extra policy, because the exposure is already partly run off — the further back you go, the less likely a claim from that year is still coming. The cost curve rises for the first few years and then flattens.

The other side of the same coin is what happens when you stop. If you let a claims-made policy lapse without buying extended reporting — often called tail coverage — you do not keep the years you paid for. The policy has to be in force when the claim is made. Retiring, changing careers, or moving to a new carrier without matching your retroactive date can all quietly erase your history.

Three things worth checking on your own policy today. What is your retroactive date, and does it reach back to when you actually started this work? If you have changed carriers, did the new policy keep the old date or reset it? And if you were to stop practising next year, what would extended reporting cost and how long would it run?

None of this is exotic — it is the ordinary mechanics of claims-made cover. But it is the difference between a policy that protects your career and one that protects only the last twelve months of it. If you are not sure what your date is, ask your broker to read it off your declarations page. It takes a minute.