Retroactive Liability Insurance

What Does Retroactive Liability Insurance Mean?

Retroactive liability insurance, also known as retroactive cover, is a policy that provides coverage for losses that occurred prior to the policy’s purchase. This coverage may include liability for incidents involving property or individuals that have not yet been reported to the insurance company.

Insuranceopedia Explains Retroactive Liability Insurance

A patient files a malpractice lawsuit against a doctor before the doctor has purchased a professional indemnity insurance policy. Similarly, a person sues a neighbor for property damage after the neighbor’s property insurance has expired. These scenarios are well-suited for retroactive liability insurance.

A standard professional liability insurance policy usually covers only claims tied to work done after the policy starts, so retroactive cover is what fills the gap when an earlier incident comes to light. The same logic applies to general liability insurance for businesses, where coverage typically begins on the policy’s effective date.

However, not all insurers provide retroactive liability insurance. Those that do often offer it only after carefully assessing the associated risks.