Professional Liability Insurance Coverage

The professional liability insurance policy cover claims that have been reported in the present phase of the policy, irrespective of whether the claim is a matter of the past. The claim however needs to be made on time, and the coverage policy needs to continue for a long period of time.

If you have professional liability insurance coverage, lapse of your policy even for one single day, can expose you to devastating law suits that can be potentially very dangerous. Most of the error and commission policies or professional liability insurance policies are written on the basis of the claims made. This means the professional liability insurance policies cover claims that have been reported in the present phase of the policy, irrespective of whether the claim is a matter of the past. Two criteria however need to be fulfilled so that you can ask for compensation from the insurance covers.

In the first place you need to have a professional liability insurance policy claim made on time. And in the second place, you must have continuous coverage from the professional liability insurance policy. This involves the exact time when the accident took place and the time when the claim was reported.

The day when your professional liability insurance policy claims coverage starts is said to be the retroactive date. This is considered to be the earliest date, when the incident would be covered. In case your policy lapses, you can conveniently start with a new policy. This way your retroactive date gets reset, and a new policy starts. If you allow your professional liability insurance policy to lapse, you cannot claim compensations for the damages or injuries you incurred before the fresh retroactive date, even if you had insurance during that period.

To illustrate this with a simple example, if you had a professional liability insurance policy or E & O policy, for the past five years, and your policy lapses in the sixth year due to financial crisis. Your professional liability insurance policy is reinstated after some period of time. It is in the seventh year atht you receive written information from the lawyer who is representing an old client. The old client is apparently unhappy with your performance as a lawyer and considers the option of suing you, in which case you are liable to pay a fine of $100,000.

You there after submit claims to your insurance provider. You are surprised to hear that your claim has been denied, though the fact remains that you had a valid insurance cover while you were working for the client. The retroactive date now becomes the re instatement date. The date for your liability insurance policy is no longer the 1st date of your policy, that had started seven years before. You may be liable for a suit going up to above $ 100,000 as a defense cost. To ensure that you are absolutely safe, such a cover is required and you have to keep in mind that you have a policy that ca cover most aspects.