Joe Barnard, CPA

Prior Acts Coverage and the Retroactive Date

Every successful accounting practice needs professional liability insurance to protect the assets of the business and the personal assets and careers of those who practice there. Understanding the components of your policy and what to look for will help ensure you are adequately covered. One area that is important to understand is prior acts coverage and the retroactive date.

The Importance of a Day

It is important that you establish your E&O policy before taking your first job or assignment, so you are covered from the very beginning. Generally, the retroactive date is the day you first start practicing accounting, and provided you allow no lapses in coverage, it does not change. However, if you put off obtaining insurance, you leave yourself open to claims that will not be covered.

Full Prior Acts Coverage

During your career, it may be necessary to switch insurance providers, but you don’t want this decision to create gaps in coverage that could leave you defenseless against lawsuits, even for a day or two.

Full prior acts coverage is a provision that means you are covered for anything that may have happened prior to the start of your new policy, back to the date at which you began coverage provided there have been no lapses.

It is one of the most important elements of a professional liability policy—one you should take note of when changing insurers because it covers claims arising from incidents that occurred prior to the new policy while you were covered by a previous policy.

Possible Pitfalls

Always check your retroactive date on every new version of your E&O policy because mistakes happen, and you don’t want this to be a point of contention if a claim arises.

Further, you’ll want to ensure that your new policy accounts for any changes in your practice, such as side jobs (including pro bono work) and new specialties. Any changes to your circumstances need to be relayed to your insurer to secure full, continuous coverage. 

It’s also important to know that retroactive dates don’t always carry forward. Once a policy ends, the retroactive date is no longer good if a new policy has not already adopted it. In the event of coverage ending without the purchase of a new one, you may want to consider tail coverage, also referred to as “extended reporting period coverage.”

If you still have questions about E&O insurance, the experts at ProDefender are ready to answer them. We can review your current policy and help you determine if you are fully and adequately covered. Call us at (866) 434-8557 or email us at If you would like to get a non-binding quote for coverage, we can help you with that as well.



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