Insurance Terms & Definitions

  • Retroactive Date/Prior Acts Date

    A retroactive date or prior acts date is the date in which the firm first obtained professional liability insurance and has maintained coverage without a lapse in coverage.

  • Professional Services

    Defined clearly in each policy form to show what types of professional services will be covered under that policy form. They differ greatly for each policy form, so extra attention to this section is strongly suggested.

  • Predecessor Firm

    Each policy form defines predecessor firm slightly different, but the most common definition is when the successor firm brings forward the majority liabilities and assets of the prior firm. This can happen with a merge, acquisition and/or name change.

  • Per Claim Deductible

    Per claim limit means that your deductible will apply each claim to both the loss and indemnity.

  • Outside Limit

    An outside limit provides an additional limit of liability for defense costs. Some carriers provide a sublimit for the outside limit and some provide an unlimited amount of coverage for defense costs in addition to the per claim limit. Defense costs will not erode the liability limit until the outside limit is exhausted.

  • Occurrence Policy

    An occurrence policy form requires that the claim occurrence be during the policy period but has no requirement on when the claim has to be reported to the carrier. Coverage will apply to covered claims that occurred during the covered policy period.

  • Loss Only Annual Aggregate Deductible

    This deductible is a combination of the first dollar defense and annual aggregate deductible. The loss only annual aggregate deductible applies only to the loss and is the maximum amount you will pay during a policy period, regardless of the number of claims within the policy period.

  • Inside Limit

    An inside limit means there is no additional limit for defense costs outside of the per claim limit. Defense costs will erode the per claim limit.

  • Grievance Defense

    A coverage feature that will provide coverage for the defense in the event of a bar or regulatory complaint. Each policy form differs in coverage language and payment amounts.

  • First Dollar Defense Deductible

    First dollar defense deductible provides coverage for defense expenses related to a claim from the first dollar. This allows the deductible to be applied only if the firm experiences a loss.

  • Extended Reporting Period

    A period of time allowed for making claims after the expiration of the “claims made” policy form, also known as a “tail.” These are often purchased when a firm closes their doors to ensure there is coverage in force for claims that may arise in the future.

  • Earnings Reimbursements/Loss of Earnings

    A coverage feature that allows you to receive a monetary payment for time spent in trial, court and arbitration/mediation for a malpractice insurance claim. Each policy form differs in coverage language and payment amounts.

  • Claims Made Policy

    A claims made policy form requires that the claim be made against the insured and reported to the carrier during the policy period.  The error must have also occurred after the retroactive date/prior acts date for coverage to apply.  

  • Annual Aggregate Deductible

    An annual aggregate deductible is applied annually to the total amount paid in a claim during a policy period, regardless of the number of claims. This limits the number of deductibles you would have to pay in a policy period if multiple claims were to arise.