Ask the Underwriter: What is Prior Acts coverage?

Last month, we kicked off a series on lawyers malpractice insurance basics to help you better understand the coverage and maybe dispel some misconceptions.

In the last ‘Ask the Underwriter,’ we discussed the difference between occurrence form policies and claims-made policies. As a refresher, the claims-made policy covers claims that arise and are reported during the policy period. You look to the current policy for coverage, not prior policy periods. Lawyers malpractice insurance is written on the claims-made form.  

We left off with the question, if the claims-made policy only covers claims that arise and are reported during the policy period, how do you cover past acts, errors, and omissions? Past acts, errors and omissions are addressed through Prior Acts Coverage.  

What is Prior Acts Coverage, you ask? 

When a firm or lawyer first purchases malpractice insurance, Prior Acts Coverage is established with the Prior Acts Date of the policy. In that first policy, the Prior Acts Date is the same date as the inception date of the first policy period, and the policy will cover claims arising from acts, errors, and omissions that occurred on or after that Prior Acts Date. As the firm or lawyer renews the policy, the Prior Acts Date does not change. So long as continuous coverage is maintained, the current policy will cover the insured back to the inception date of the initial policy, i.e., the Prior Acts Date. For example, if an insured first purchased malpractice insurance effective August 1, 2000, that date, August 1, 2000, would become his or her Prior Acts Date. The insured renews the policy every August 1st thereafter. Therefore, the insured’s 2025 policy will cover claims arising from acts, errors, and omissions that occurred on or after August 1, 2000 (assuming no exclusion or other provision of the policy excludes coverage). Continuity of coverage, as you may have gathered, is key.

So continuous coverage will protect you when you retire or leave private practice, won’t it? We will answer that and address how to protect yourself after you retire or leave private practice in the next ‘Ask the Underwriter.’