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Retroactive Malpractice Insurance for Attorneys

Up until 1970, legal malpractice insurance was written as an occurrence-based policy. Attorneys who were covered through this policy typically received coverage for events that occurred during the terms of the policy regardless of when the claim may have been filed. However, it became difficult for insurers to value policies given the unknown of potential claims that may be filed years down the road. The risk became uncertain for both the insurers and the insured. As a result, prior act coverage was established.

Retroactive Coverage With a Current Policy

Lawyer prior act coverage is a policy that relied on retroactive coverage dates to a claims-made policy. In this situation, lawyers can receive coverage for claims filed against the practice so long as the malpractice issue occurs after the retroactive date established on the policy. There are specific terms and conditions for each individual policy, but this is the general concept behind prior act insurance.

Claims of malpractice that take place before the retroactive date are not a part of the coverage, even if the claim is filed during a current policy term. As a risk management strategy, attorneys should consider establishing the retractive date for the first day they began practicing law.

Continuous coverage is important for full legal protection, which is why care must be taken when establishing retroactive dates. If a claim is filed that is not covered, the attorney will face significant out-of-pocket expenses that could ruin his or her practice.