A claims-made insurance errors & omissions or malpractice policy may have a Firm Prior Acts Date, an Individual Prior Acts Date, a Career Coverage Prior Acts Date and/or Predecessor
Firm Prior Acts Date. Each can be used to address specific coverage needs:
1. Firm Prior Acts – As the name implies covers work on behalf of the named insured firm (entity) after a specified date. This can be an actual date or may state ‘Full Prior Acts’.
2. Individual Prior Acts—An individual prior acts date restricts coverage for individual professionals to after their start date with the firm. After this date coverage for covered work on behalf of the named insured firm is provided. Not every professional in the firm may have an individual prior acts date. If the professional does not have a stated individual prior acts date, the assumption is that the start date with the named insured firm or the firm past acts coverage inception date.
3. Career Coverage—A professional with a career coverage endorsement has prior acts coverage that precedes that professional’s start date with the firm. It may also precede the inception date of the firm’s claims made continuous coverage. With career coverage this gives the professional coverage for work that the professional has done prior to association with the current named insured firm. One should not confuse this coverage with predecessor firm prior acts. Predecessor firm prior acts covers work done on behalf of the predecessor firm whereas career coverage provides secondary coverage only for the individually named professional.
4. Predecessor Firm Prior Acts–If the current firm had a ‘predecessor’ firm with past acts coverage it should be addressed by endorsement in the current firm’s policy. This is important in that past acts coverage for the predecessor firm is provided under the successor firm’s policy. Without the policy being properly endorsed, claims that precede the current firm’s inception may not be covered. If the predecessor firm is named in an action without a properly endorse policy, there may be no coverage. Wording and definitions for a ‘predecessor’ firm vary by insurer. Great care needs to be taken if switching insurers to maintain Predecessor Firm Prior Acts.
When changing from one malpractice insurance insurer to another it is very important that all prior acts dates are maintained at renewal with the new insurer. If these coverages are dropped or changed at renewal, if the firm settles a new claim it will be under the new claims-made coverage form without the proper coverage. For covered acts that occurred under the old policy, remember with claims-made coverage once a policy expires so does past acts coverage under that old policy.
When looking to change or renew malpractice coverage it is important to have an insurance agency that specializes in malpractice insurance. Different policies handle prior acts differently. Not properly addressing prior acts coverage at issuance with a new insurer can leave a firm open to uncovered malpractice claims.
Note: The above is general information about a Claims-Made Insurance policy concept. Different insurance policies and different situations may or may not treat these concepts in a similar manner.
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Lee Norcross, MBA, CPCU Managing Director, CEO (616) 940-1101 Ext. 7080 |
