When purchasing lawyers professional liability insurance (LPL), sometimes alternately called legal malpractice insurance, a key concept to understand is the prior acts date. This term is critical in determining how much protection you have under your policy and can affect the coverage for claims. But what exactly is a prior acts date, and why is it important?
What is a prior acts date?
A prior acts date is the point in time from which your LPL coverage begins. (For this reason, it is sometimes referred to as the retroactive date.) This means that any act, error or omission that occurred on or after this date can be covered under your policy, as long as it’s reported while your policy is in force.
This also means if a claim arises from legal services you provided before the prior acts date, your policy will not cover it, even if the claim is made while the policy is active.
Why is the prior acts date important?
Most professional liability insurance, including legal malpractice insurance, operates on a claims-made basis. This means that for a claim to be covered, both the incident (the error or omission) and the claim (when the error or omission is brought to light) must fall within the effective policy period, including on or after the prior acts date.
The prior acts date is important for establishing a boundary for your LPL coverage. Say you’ve had continuous LPL insurance for the past 5 years, with a prior acts date from 5 years ago. If a client files a claim today for an incident that occurred 3 years ago, your current policy would provide coverage. However, if you purchased your policy yesterday with a prior acts date of yesterday, and a claim arises today for an incident that occurred 3 years ago, the policy would not cover the claim, since the incident occurred before the prior acts date.
How does the prior acts date affect new policies?
When purchasing a new LPL policy, whether for the first time or when switching insurance companies, it’s important to ensure you understand the implications of your prior acts date. Many make the mistake of assuming any new policy will automatically cover past work, but that’s not always the case.
You generally have three options when getting a new policy:
- Full prior acts coverage. This is typically only available for renewing policyholders with continuous coverage. If you’ve had uninterrupted LPL coverage, you can usually maintain your original prior acts date. Meaning you’re protected all the way back to the start date of your first policy. This is the best reason to maintain coverage without a lapse – so your LPL policy continues to provide seamless protection for your past work.
- Limited prior acts coverage. In some cases, insurers may agree to cover new policyholders for a limited amount of time prior to the start of their new policy. For example, they may agree to a prior acts date that is a few years old, depending on your claims history and the insurer’s underwriting criteria.
- No prior acts coverage. If you don’t request or qualify for prior acts coverage, your policy’s prior acts date will be the date the new policy starts. Any claims made for acts prior to this date will not be covered.
What happens if there is a lapse in coverage?
Maintaining continuous professional liability insurance is crucial. If there’s a lapse in coverage – say you let your policy expire or there’s a gap when switching providers – you risk losing your prior acts date. This means any future LPL policy you purchase may only cover claims for incidents that occur once the new policy starts, leaving you exposed to risks from past work.
Prior acts dates are critical for your protection.
Understanding your prior acts date is key to ensuring your LPL insurance provides adequate protection. It can be the difference between being protected or facing out-of-pocket costs for legal defense and settlements.
When purchasing or renewing LPL policy, always ask your provider about your prior acts date and ensure it aligns with your professional history. By staying informed and proactive about your prior acts date, and other policy details, you’ll maintain stronger protection and avoid costly gaps in your coverage. As always, if you have questions about your policy or want to know how you can be better protected, contact us today.
Author
On the OAMIC team since 2005, Isaac now serves as vice president, director of operations. He is a licensed insurance producer with two bachelor’s degrees from the University of Oklahoma. Prior to his time at OAMIC, Isaac was part of the engineering team that developed banking software for some of the largest banks in the United States.