A claims-made insurance error 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 or a combination for the former. Different prior acts endorsements 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 until after their start date with the firm. 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 the professional’s start date with the firm. It may also precede the inception date of the firm’s claims-made continuous coverage. Career coverage gives professionals coverage for acts occurring prior to association with the current named insured entity. Do not confuse Career Coverage with Predecessor Firm Prior Acts. Predecessor Firm prior acts covers work done on behalf a predecessor firm whereas Career Coverage provides secondary coverage only for the individually named professional.
4. Predecessor Firm Prior Acts—A predecessor firm past acts coverage is an endorsement on the successor firm’s policy. Actions against a predecessor firm may not be covered unless the successor firm’s policy is properly endorsed. Wording and definitions for a ‘predecessor’ firm vary by insurer and not all insurers provide this coverage.
When changing insurers review all prior acts endorsements and dates on the new insurer’s policy. With claims-made coverage newly reported claims settle under the new claims-made coverage form. Dropping a prior acts endorsement or changing the prior acts dates can expose an entity to uninsured claims.
Finally different insurance policies may address prior acts differently. Not properly understanding the provided prior acts coverage at issuance with a new insurer can leave an entity 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 an equivalent manner.
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Lee Norcross, MBA, CPCU, CPIA
Managing Director, CEO
(616) 940-1101 Ext. 7080