Prior Acts Coverage

Updated: 29 February 2024

What Does Prior Acts Coverage Mean?

Prior acts coverage is insurance coverage that applies to events that happened prior to the purchase of the insurance policy. It is a standard feature of liability policies, and tends to be used to close the gap between the time that services are rendered and the time when claims are filed.

Insuranceopedia Explains Prior Acts Coverage

Insurance companies don’t provide policies with prior acts coverage unless the business interested in purchasing it has previously had insurance coverage. This allows the insurer to avoid issuing policies to companies who wait until they need an insurance policy before purchasing.

Although they can avoid this kind of free-riding, offering prior acts coverage means the insurance company will be exposed to a higher claims risk. Because of this, companies who offer this kind of coverage typically charge more for premiums, at least for a certain period of time.

While some policies offer full prior acts coverage, many only offer coverage for events that happened after a particular retroactive date.

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