I switched insurance providers in January to save $20 a month. In March, a client sued me for a logo I designed last November. My new insurance company denied the claim because the work happened before my policy start date. My old insurance company denied the claim because I had cancelled the policy. I had fallen into the “Gap.”
Key Takeaways
- Claims Made Policies: E&O is “Claims Made.” You must be insured when the work was done AND when the claim is filed.
- The Retroactive Date: This is the most important date on your policy. It should match the day you started your business, not the day you bought the current policy.
- The “Gap”: If you switch carriers and don’t carry over your “Retro Date,” you lose coverage for all past work.
- Tail Coverage: If you retire or cancel, you must buy “Tail Coverage” to cover past work for future claims.
The “Why”: The Continuity of Coverage
The Trap: When you switch to a cheaper carrier (e.g., from Hiscox to Thimble), the new carrier defaults the “Retroactive Date” to today.
The Result: You are only covered for work you start tomorrow. All your past 5 years of designs are now uninsured.
You must manually request “Prior Acts Coverage” and prove you had continuous insurance to keep your original Retro Date.
The Investigation: I Quoted 3 Major Carriers
1. Hiscox
- My Analysis: When quoting, they ask: “Do you currently have insurance?” If yes, they ask for the “Retroactive Date.” If you enter it correctly, they will honor your past work.
2. Thimble
- My Analysis: Thimble’s on-demand policies often have no prior acts coverage. They cover the specific job window you buy. Be very careful switching to them from a continuous policy.
3. PROLINK (Broker)
- My Analysis: A human broker will always check this. They know that resetting the Retro Date is malpractice. They will fight to keep your 2020 start date on the 2026 policy.
[IMAGE: Timeline graphic showing “Policy A,” “Policy B,” and the “Gap” where claims are denied]
Comparison Table: Switching Insurance
| Action | Retro Date | Coverage for Past Work? | Risk Level |
| Renew same policy | 2020 | YES | Low |
| Switch & Match Date | 2020 | YES | Low |
| Switch & Reset Date | 2026 | NO | EXTREME |
Step-by-Step Action Plan
- Find Your “Retro Date”: Look at your current Declaration Page. Write that date down.
- Quote with Prior Acts: When buying new insurance, enter that date.
- Do Not Lapse: Do not cancel the old policy until the new one is active. A 1-day gap can void prior acts.
- Buy Tail (Extended Reporting Period): If you are quitting business, pay the extra ~150% premium to cover the next 3 years of claims.
FAQ
Can I buy coverage for past work if I never had insurance?
No. That is like buying fire insurance for a house that already burned down. You can only keep existing past coverage alive.
How far back should it go?
Ideally, to the day you opened your business. Statutes of limitation can be 3-7 years.
Does this apply to General Liability?
No. GL is usually “Occurrence Based,” meaning the policy you had back then covers the claim, even if you cancel it later. E&O is the tricky one.