Professional indemnity insurance is written on a claims-made basis, unlike, say, employers' liability, which responds on an occurrence basis. On an occurrence policy the year of the wrongful act determines which policy pays. On a claims-made policy it is the year in which the claim is first made against the insured - or the year in which a circumstance is first notified - that determines cover. Understanding this shift is the key to understanding why notification is so central to PI.
Because cover attaches by reference to when a claim is made or a circumstance notified, the policy in force at that moment is the policy that responds. A negligent act committed in 2021 but resulting in a claim first made in 2026 is dealt with by the 2026 policy, provided the act falls after any retroactive date. This is why continuity of cover matters: a gap in the claims-made programme can leave a past act uninsured because no policy was in force when the claim arrived. It is also why notifying a circumstance before a policy ends can be decisive.
Two features control how far back a claims-made policy will reach. The retroactive date is the earliest date of wrongful act the policy will cover; acts before it are excluded. Prior acts cover, sometimes called full retroactive cover, removes that limitation so that past work is picked up regardless of when it was performed. When a firm changes insurer, matching or improving the retroactive date is essential to avoid a hole in cover. These features are covered in our reference entries on the retroactive date and prior acts cover.
Notification is the bridge between the wrongful act and the claim. If an insured notifies a circumstance in the current year, the deeming provision fixes cover to that year even though the claim itself may arrive later, after the policy has lapsed. Without that notification, the later claim depends entirely on a policy being in force, and on the retroactive date, when it eventually lands. Solicitors and architects, whose work can be challenged years after completion, rely on this mechanism. See our guides to solicitors' PI insurance and architects' PI insurance.
On claims-made cover, three things protect a firm: unbroken continuity of insurance, an appropriate retroactive date, and prompt notification of claims and circumstances. Each addresses a different failure mode, and all three need to be managed together at every renewal. The same interaction explains why taking out cover for the first time, or after a gap, needs care: without prior acts cover or an early enough retroactive date, past work can sit outside the new policy even though a claim about it arrives while that policy is live. Apex maps a firm's claims-made programme, checks the retroactive date on each move and ensures known matters are notified before cover changes hands.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.