Prior acts coverage

Prior acts coverage is the element of a claims-made professional indemnity policy that extends indemnity to civil liability arising from acts, errors, or omissions committed before the start of the current policy period, subject to the policy's retroactive date and other terms.

Definition §

A claims-made professional indemnity (PI) policy responds to claims first made against the insured during the policy period, regardless of when the underlying act or omission occurred — provided that act or omission falls within the temporal window the policy defines. Prior acts coverage is the means by which that window is extended backwards in time. Without prior acts coverage, a claims-made policy would respond only to claims arising out of work done during the policy period itself, a structure that would leave each new policy year almost entirely empty of cover for an active professional.^[1]

In practice, every claims-made PI policy issued to an established professional contains some form of prior acts coverage, even if it is not labelled as such. The relevant control device is the retroactive date, which sets the earliest date for an act, error, or omission that the policy will cover. Prior acts coverage and the retroactive date are two sides of the same concept: prior acts coverage describes the substantive extension, and the retroactive date describes the cut-off.^[1]

Full prior acts coverage means the policy carries no retroactive date or, equivalently, sets the date so far back as to encompass the entire period during which the insured has been practising. Limited prior acts coverage sets a retroactive date inside the insured's history, typically aligning with the date on which the firm first procured continuous PI insurance. Excluded prior acts means no cover for work done before a stated date, which is unusual for established firms but common for newly authorised individuals or new firms.

The market default in the solicitors' market, driven by the SRA Minimum Terms and Conditions (MTC), is full prior acts cover with no retroactive date. For other professions, the position is negotiated and depends on the insured's claims history, the depth of the market, and whether the insured has had continuous prior cover.^[2]

Legal / Regulatory basis §

Prior acts coverage is a contractual feature rather than a statutory one, but several statutory regimes influence its operation. The Insurance Act 2015 governs the duty of fair presentation, which requires the insured to disclose material information about prior acts, including the firm's history, claims experience, and any known circumstances likely to give rise to a claim. Failure to make a fair presentation engages the insurer's remedies in section 8 and may, in practice, undermine prior acts coverage even where it is contractually granted.^[3]

The Limitation Act 1980 sets the temporal framework within which claims for professional negligence may be brought: six years for breach of contract or tort under sections 2 and 5, with a postponement to three years from the date of knowledge under section 14A and a 15-year long-stop under the Latent Damage Act 1986.^[4][5] Prior acts coverage is meaningful only to the extent that limitation has not expired. A policy with unlimited prior acts cover is, in real terms, bounded by limitation: the insurer's residual exposure is whatever residual claim might still be brought against the insured.

For solicitors, the SRA MTC dictate that qualifying insurance must cover the firm's civil liability arising from the firm's practice, without a retroactive date that would limit prior acts cover.^[2] The MTC also coordinate with run-off cover and the post-six-year arrangements administered through the Solicitors Indemnity Fund (SIF) successor arrangements, which provide a backstop for claims emerging long after a firm has closed.^[6]

For RICS-regulated surveyors, ICAEW-regulated accountants, and ARB-registered architects, the position is governed by the relevant professional body rules, which generally require continuous PI cover with prior acts cover sufficient to capture the firm's historic exposure.^[7]

How it works in practice §

Prior acts coverage is operationalised through the retroactive date specified in the policy schedule and through the policy wording's definition of the act or omission that triggers cover. When a claim is made during the policy period, the insurer asks two questions: was the claim first made during the period (the trigger), and did the underlying act or omission occur after the retroactive date (the prior acts test). Both must be answered in the affirmative for the policy to respond.

When a firm changes insurers, the new insurer typically agrees to maintain the same retroactive date as the expiring insurer, so that the depth of cover is preserved. This is the principal reason brokers track retroactive dates carefully: a renewal that inadvertently moves the retroactive date forward can strip away years of historic cover.

When a firm acquires another firm, the acquirer's PI policy is normally endorsed to extend prior acts cover to the acquired firm's pre-merger work. The retroactive date may be modified to reflect when the acquired firm first obtained continuous cover. Without such an endorsement, the acquired firm's historic work would fall outside the acquirer's policy.

When a firm closes, prior acts coverage is preserved through run-off coverage. Run-off is the continuation of claims-made cover, with the retroactive date preserved, but with no new acts added (because the firm is not undertaking new work). Run-off generally lasts for six years for most professions and continues, in the solicitors' market, through the SIF successor arrangements beyond six years.^[6]

The interaction between prior acts coverage and the known circumstances exclusion is important. Prior acts coverage extends cover backwards in time; the known circumstances exclusion strips it away for matters the insured was already aware of. A claim relating to work done five years ago is within the prior acts window; if the insured first became aware of the underlying error two years ago and did not notify, the known circumstances exclusion may engage.

Common variations §

Variations include the retroactive date itself (none, fixed, or rolling), the breadth of the act or omission definition, whether the policy covers prior acts of predecessor firms, and how the policy treats acts performed by partners or employees before they joined the insured firm.

Some policies offer a continuity provision tying prior acts cover to a chain of policies issued by the same insurer over successive years. This is a softer form of cover than a free-standing retroactive date and can be lost when the insurer changes. Continuous coverage clauses sit alongside the retroactive date in this respect.

Bespoke PI policies for large firms sometimes apportion prior acts cover across separate aggregate limits for different practice areas. Smaller firms typically operate under a single aggregate limit covering all prior acts within the retroactive window.

For new entrants, prior acts cover is generally unavailable for the first policy year, since there are no prior acts to cover. As the firm builds a history, the retroactive date moves further back, and the depth of prior acts cover accumulates.

Example §

An accountancy firm has been in continuous practice since 2010, with successive PI policies each carrying a retroactive date of 1 January 2010. In 2026, the firm receives a claim from a client who alleges that audit work performed in 2018 was negligent. The claim is first made in 2026, which falls within the current policy period; the act complained of occurred after the retroactive date of 1 January 2010, which falls within prior acts cover. The 2026 policy responds, subject to its limit of indemnity, deductible, and exclusions. If, instead, the retroactive date had been 1 January 2020, the 2018 work would have fallen outside prior acts cover and the claim would not be indemnified.

See also §

• /wiki/professional-indemnity-insurance/ — the policy framework
• /wiki/retroactive-date/ — the temporal cut-off that defines the prior acts window
• /wiki/run-off-coverage/ — preservation of prior acts cover after closure
• /wiki/continuous-coverage-clause/ — alternative form of historic protection
• /wiki/known-circumstances-exclusion/ — interaction with prior knowledge
• /wiki/solicitors-indemnity-fund/ — post-six-year arrangements for solicitors
• /wiki/aggregation-clause/ — interaction with related historic claims
• /wiki/fair-presentation-of-the-risk/ — duty to disclose prior matters

References §

1. ↑ Insurance Act 2015 — https://www.legislation.gov.uk/ukpga/2015/4
2. ↑ SRA Minimum Terms and Conditions of Professional Indemnity Insurance — https://www.sra.org.uk/
3. ↑ Insurance Act 2015, sections 3-8 — https://www.legislation.gov.uk/ukpga/2015/4
4. ↑ Limitation Act 1980, sections 2, 5, 14A — https://www.legislation.gov.uk/ukpga/1980/58
5. ↑ Latent Damage Act 1986 — https://www.legislation.gov.uk/ukpga/1986/37
6. ↑ SRA Indemnity Insurance Rules — https://www.sra.org.uk/
7. ↑ RICS Rules of Conduct 2022 — https://www.rics.org/