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Prior acts coverage

Prior acts coverage, also known as nose coverage, offers protection from events that occurred before your existing policy was purchased, up to a particular retroactive date.

What is prior acts coverage?

Prior acts coverage protects you from incidents that happened before you bought your policy, as long as you’ve maintained continuous coverage. It is typically included in claims-made liability policies, such as errors and omissions insurance (also called E&O or professional liability insurance).

For example, say your app development business is sued over an app you sold two years ago. Your existing E&O insurance should include prior acts, which means the lawsuit would be fully covered even though the mistake occurred before you purchased the E&O policy.

What’s the difference between prior acts and full prior acts coverage?

Prior acts coverage offers protection that starts at a specific retroactive date, typically the date from which you have maintained uninterrupted insurance. With any claims-made policy, it’s important to maintain continuous coverage. Full prior acts coverage does not have a retroactive date. That means that you’ll have complete protection for a previous incident no matter when it took place.

Most insurers are not likely to offer full prior acts coverage to businesses that have never had claims-made liability insurance policies. The reasoning is that the business might already be aware of a risk, prompting it to file a claim under the new policy.

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Prior acts coverage vs. tail coverage

While prior acts are events that took place before a policy is purchased, tail coverage is the opposite: it protects you once a policy has expired.

Tail coverage, also known as an extended reporting period, is an addition to a policy that extends the amount of time you have to report a claim after a policy has been canceled. In other words, if an incident occurred during the time you had the policy, but a claim wasn’t filed until after the policy had expired, you would still be protected for a certain period of time. Most claims-made policies will offer tail coverage as an addition to the policy.

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