Understand their purpose and beware of pitfalls
Most professional indemnity policies will incorporate a retroactive date and this will generally be the date from which you have held uninterrupted professional indemnity cover; ideally this should also coincide with the date you started to provide professional accountancy services.
The purpose of the retroactive date is to exclude claims arising from any work undertaken or advice given priorto the specified date. It is therefore important that any retroactive date shown is the date that you started practicing, so that all the work you have completed in the past will be covered.
The retroactive date is usually shown on your policy schedule or by way of an endorsement and can be stated in in a number of ways:
Both the above terms will cover all your past work.
When you are renewing your professional indemnity insurance, and especially if you are changing insurers or broker, it is important to check that the retroactive date is accurate.
Beware of insurance providers offering very competitive premiums with a ‘retroactive date inception’. The premium is attractive because none of your past work will be covered and there is little risk to the insurer.