The Retroactive Date is more commonly referred to as a Prior Acts Date. The date that defines the extent of coverage in time under claims-made liability policies. The prior acts date is usually the same date from which continuous coverage was first obtained by the current or predecessor firm. Claims resulting from occurrence’s prior to the policy’s stated retroactive date are not insured. Policies can contain a Prior Acts Date or be designated as having Full Prior Acts. The first year a firm is covered, their prior acts date will most likely be the date of policy inception. It is critical that coverage is maintained continuously to preserve a firms prior acts date and thus coverage of work performed back to that date. A gap in coverage will jeopardize a firms prior acts date. If a firm changes insurance company, it is important the same prior acts date appears on the new policy. With the exception of some non-admitted companies, most insurance companies will honor a firms prior acts date when switching companies.
Insurance Encyclopedia
Liability Limits
The stipulated sum or sums beyond which an insurance company is not liable to protect the insured.
Liability limits (Liability Insurance)
The maximum benefit available for payout in a liability insurance policy.
Liability Loss Exposure
In addition to property and net income loss exposures a business faces possibility that it will be held legally liable for property damage or personal injuries suffered by others. Anyone can sue for anything. They might not win – indeed they might be thrown out of court – but they can sue, making life difficult for the defendant even though he might have acted as a saint.
Liability sequence
Four distinct stages apply to liability claims. 1. The cause (e.g. spillage of toxic chemical onto grazing land) the initial act. 2. The effect (cows ill after grazing ) – the occurrence. 3. Discovery of injuries – the manifestation. 4. Action the making of a claim. The sequence may be lengthy or virtually instantaneous e.g. workman burns down a house. Any one stage may be used to trigger a claim. Public liability policies are usually occurrence policies, i.e. the injury/damage must occur within the policy period regardless of the time of the initial act or of the claim. In long-tail disease claims and gradual pollution many years may separate the ‘occurrence’ from the ‘manifestation’. Professional indemnity insurance is ‘claims-made’, a stage 4 trigger. See OCCURRENCE TRIGGER THEORIES; TRIPLE TRIGGER THEORY. See Figure 5. – –
Liability Without Fault
Principle on which workers compensation is based, holding the employer absolutely liable for occupational injuries or disease suffered by workers, regardless of who is at fault.
Liability, Directors and Officers Liability
The Corporate decisions that yesterday did not materially affect other people today powerfully impinge on their lives and the subject matter has a direct bearing on the potential liabilities of Corporate Directors’ and Officers’ today. The increase in litigation against directors reflects a change in the attitude of the general public towards greater management accountability and hence the position of a Director is becoming far more onerous. Actions are most likely to be commended in relation to: (i) Actual or alleged breach of trust (ii) Breach of duty or warranty of authority (iii) Neglect or Omission (iv) Error or misstatement or misleading statement (v) Failure to supervise or regulate properly. Who might bring an Action? (i) Shareholders: alleging financial loss attributable to failure by Directors or Officers responsible (ii) Employees: alleging unfair dismissal, discrimination, sexual harassment or mismanagement of pension funds (iii) Customers: alleging that they have suffered financial loss following wrongful advice on the application or suitability of product (iv) Competitors: alleging that their businesses have been adversely affected by a restrictive trade practice e.g.: price fixing (v) Members of the Public: failure to effect and maintain adequate control or services. (vi) Regulatory Bodies: for offences under the Companies Ordinance or breaches in similar legislation. Potential Allegations: The following list provides typical examples of “wrongful acts” which could be alleged against a Director or Officer – though, this is not an exhaustive list: (i) Inaccurate statements of financial conditions (ii) Errors in annual accounts (iii) Conflict of interest (iv) Lack of judgment, diligence or good faith (v) Mismanagement of funds (vi) Misstatements in prospectuses (vii) Allotment of shares (viii) Unauthorized or imprudent loans or investments (ix) Failure to obtain competitive bids (x) Imprudent expansion resulting in a loss (xi) Using inside information (xii) Unwarranted dividend payment, salaries or compensation (xiii) Misleading statements filed with the Stock exchange (xiv) Misrepresentation in acquisition agreement for the purchase of another Company (xv) Wrongful dismissal of an employee. Possible consequences: Civil Action: May involve personal liability for: (a) Damages (b) Claimant’s Costs (c) Costs of Personal Legal Representation. Criminal Action: prosecution may be brought under various Statutes. Whilst fines and penalties under Criminal Actions are not insurable, Directors and Officers may face substantial costs in arranging legal representation to defend such actions. These legal costs are covered by the D & O insurance provided the defence is successful.