Another unique element of claims made policies is that they may impose what are known as retroactive date requirements. These requirements stipulate that for coverage to apply, the wrongful act giving rise to a claim must have taken place on or after the policy's retroactive date regardless of when the claim is ultimately made against the insured. No coverage applies if the wrongful act took place before a policy's retroactive date. It is to the insured's advantage if a policy does not include a retroactive date, thus allowing for full prior coverage. If an underwriter insists that a retroactive date be made part of a policy, it is to the insured's advantage if it is as early as possible in time, thereby affording coverage for the greatest possible number of events.
Retroactive dates are also an important consideration when switching carriers.
The insured must make sure the new insurer will provide the same retro date, or full prior acts coverage, if not, tail coverage should be purchased from the previous carrier. Tail coverage should also be purchased if professional liability coverage is discontinued. The most important defense provision to look for in a professional liability policy is the payment terms. Another important item to look for is the defense selection process. These are usually negotiable items in the contract.