Professional liability for the advice you give.

Retroactive dates, tails and switching without a gap

Two dates decide what a claims-made policy will look at: the policy period, when the claim has to be made, and the retroactive date. IRMI describes the retroactive date, found in many but not all claims-made policies, as eliminating coverage for claims from wrongful acts before that date, even when the claim is first made during the policy period. A policy with no retroactive date, or one earlier than its start date, has what IRMI calls prior acts coverage: it responds to claims about work done before the current term.

When a claims-made policy ends, the extended reporting period, or tail, is what's left. IRMI describes it as letting you report claims made after the policy expired or was canceled, for wrongful acts during that policy period. Read the wording for two kinds:

• Basic ERP. IRMI notes that some professional liability policies extend the reporting period 30 to 60 days at no additional charge when the insurer cancels or nonrenews; in a few, also when you cancel or nonrenew.
• Purchased tail. It requires additional premium and runs for a limited time, which IRMI says is generally one year. It applies only to wrongful acts during the expired policy period, never to new work, and it does not reinstate the aggregate limit.

IRMI points to switching from one claims-made policy to another, and retiring or leaving a profession, as the moments a gap can open. When a client moves carriers, I compare the new quote's retroactive date with the old policy's before anything is bound. If the new carrier won't carry the earlier date forward, the other route is the outgoing policy's extended reporting period, so ask that carrier how and when it can be bought. The claims-made vs. occurrence guide walks through the basic trigger.

Lawyers and real estate: state rules that touch E&O

Some professions have their own rules that touch this coverage, and they vary by state.

California lawyers: disclose if you're uninsured

Rule 1.4.2 of the California Rules of Professional Conduct requires a lawyer who knows or reasonably should know they don't have professional liability insurance to tell the client so in writing at the time of engagement. If that notice wasn't given at engagement and coverage ends during the representation, the lawyer must tell the client in writing within thirty days of when they know or reasonably should know it's gone. The rule doesn't apply when the lawyer expects the matter to take four hours or less (until it goes past four hours), to government lawyers and in-house counsel acting in that capacity, to legal services in an emergency to avoid foreseeable prejudice to the client, or when the client already got the written notice. The State Bar's comments say the duty covers new clients and new engagements with returning clients, and the notice can go in a written fee agreement or a separate writing. More on lawyers professional liability.

Real estate: a protection written into California law

The California Department of Real Estate's Reference Book says brokers should consider carrying errors and omissions insurance covering their salespersons, broker associates and office personnel, regardless of their contractual and employment relationships with the broker. Insurance Code 11589.5 bars an insurer that writes professional liability for California real estate licensees from excluding liability for breach of the duties in Civil Code Article 2, starting with section 2079, which the Reference Book summarizes as the duty to visually inspect one-to-four unit residential property and disclose material facts to the buyer. An insurer can still exclude dishonest, fraudulent, criminal or malicious acts. Other states go further: the Colorado Division of Real Estate says Commission Rule 3.9 requires all active real estate brokers to carry E&O. See real estate E&O and when professional liability is required in California.

Official sources

• IRMI - Retroactive date
• IRMI - Prior acts coverage
• IRMI - Basic extended reporting period
• IRMI - Tail coverage
• IRMI - Defense within limits
• IRMI - Consent to settlement clause
• IRMI - Professional liability
• State Bar of California - Rules of Professional Conduct 2026 (Rule 1.4.2)
• California DRE Reference Book ch. 10 (Agency): E&O, Civil Code 2079 duties, Insurance Code 11589.5
• Colorado Division of Real Estate - E&O Insurance Requirements (CREC Rule 3.9)