Switching or Closing Before a January 1 Renewal? What Happens to Your Professional Liability Coverage

If your professional liability policy renews on January 1 and you are thinking about switching carriers, closing the business or joining a firm, read your policy’s retroactive date before you do anything. Most professional liability (errors and omissions) policies are claims-made, which means past work is only covered while you keep continuous coverage or buy an extended reporting period, usually called tail coverage. In Connecticut the clock on that decision is short: when a claims-made policy from a licensed Connecticut insurer ends, you get an automatic 30 days to report claims, and you have 30 days to buy a longer tail, or 15 days from your insurer’s written notice if that runs later.

What does claims-made actually mean?

A claims-made policy pays for a claim that is made, and reported, while the policy is in force, as long as the work behind it was done after the policy’s retroactive date. It does not matter that the mistake happened years earlier. What matters is which policy is in force when the client’s letter arrives.

That is different from the general liability policy most businesses also carry, which is usually written on an occurrence basis: it covers an injury or damage that happens during the policy year, whenever the claim comes in. If you are not sure which one your business needs, our post on what general liability covers explains where one stops and the other starts.

What is a retroactive date, and why does it matter when I switch?

The retroactive date is the earliest date of work the policy will cover. When you first buy E&O, it is usually the day the policy starts. As long as you renew, or switch to a new carrier that keeps the same retro date, the work you have done generally stays covered, subject to the policy’s terms and anything you knew about before the switch.

The trap is a new policy with a new retro date. If the new carrier sets the retroactive date to January 1, 2027, a claim in March about work you did in 2025 is not covered by the new policy, and the old policy has ended. Before you switch, ask for the new quote to carry your existing retroactive date forward, sometimes called full prior acts. Connecticut regulations say that once a retro date is set, an insurer can only move it later with your written consent, so read anything you are asked to sign at renewal.

What is tail coverage, and when do I need it?

Tail coverage, formally an extended reporting period, keeps the right to report claims open after the policy ends, for work done before it ended. It does not cover any new work. You need it when there will be no next policy to pick up the old work:

• You are closing the business or retiring. This is the classic case. Claims about old work can arrive years later.
• You are switching carriers and the new one will not match your retro date. Buying a tail on the old policy, or paying the new carrier for prior acts, are the two ways to close that gap. Price both.
• You are joining a firm. The firm’s policy may not cover work you did on your own. Ask in writing.
• Your current carrier cuts your coverage. In Connecticut, a reduction in limits, a higher deductible or a new exclusion counts as a termination for these rules, so the same tail rights apply to the coverage that was taken away.

Tails are usually priced as a percentage of your last annual premium, and longer tails cost more. Connecticut also requires the insurer to make a tail available with an aggregate limit at least equal to the policy’s aggregate limit.

What does Connecticut require when a claims-made policy ends?

Connecticut’s claims-made regulations give you two protections when coverage ends, whether you cancel, the insurer cancels or non-renews, or you stop paying:

1. An automatic extended reporting period of at least 30 days. You do not have to ask for it.
2. The right to buy a longer extended reporting period, at any time during the policy term and up to 30 days after the coverage ends, or 15 days after your insurer’s written notice if that is later. That includes coverage that ends for non-payment, but the tail does not take effect until the premium you owe is paid. On professional liability, the insurer must offer an unlimited tail as one of the options.

That second deadline is the one that gets missed. Your insurer must send written notice of your tail options and price within 15 days after coverage ends, and you have 30 days from the end of coverage or 15 days from that notice, whichever is later. Plan on the 30 days. If your policy ends December 31, plan to buy any tail by January 30, and the time to price it is now.

Two caveats. These rules apply to policies from licensed Connecticut insurers. Some professional liability is written by surplus lines carriers, which do not have to follow Connecticut’s policy form rules, so read your own policy’s extended reporting section. And for a few professions, including doctors, lawyers, dentists, and architects and engineers, Connecticut law separately requires professional liability policies to offer prior acts coverage.

What should I do before January 1?

Whether you are a consultant in Farmington, a bookkeeper in West Hartford or a designer in Simsbury, pull your current declarations page and find three things: the retroactive date, the policy’s extended reporting period section, and the expiration date. Then decide which of the cases above you are in. If you are switching, get the replacement quote with your retro date matched before you let the old policy lapse. If you are closing or retiring, price the tail options now, before the 30 days start.

Switching carriers or winding down the business? Call (860) 672-1733 before the current policy lapses. The window to buy tail coverage is short, so plan on 30 days from the day the policy ends. More on how we place professional liability insurance for Connecticut businesses.

Professional liability renewal questions

What is tail coverage on a professional liability policy?

Tail coverage, or an extended reporting period, lets you report claims after a claims-made policy ends, for work you did before it ended. It does not cover new work. You need it when you close the business, retire, or switch to a carrier that will not cover your earlier work.

How long do I have to buy tail coverage in Connecticut?

For a claims-made policy from a licensed Connecticut insurer, you can buy an extended reporting period at any time during the policy term and up to 30 days after the coverage ends, or 15 days after your insurer’s written notice if that is later. That includes non-payment, though the tail does not take effect until the premium owed is paid. The policy also gives you an automatic extended reporting period of at least 30 days.

What happens to my retroactive date if I switch E&O carriers?

It depends on the new policy. If the new carrier matches your existing retroactive date, your past work generally stays covered, subject to policy terms and anything you knew about before the switch. If it sets a new retro date, work done before that date is not covered unless you buy tail coverage on the old policy. In Connecticut, an insurer can move a retro date later only with your written consent.

Do I need tail coverage if I renew with the same carrier?

Usually not. As long as you renew continuously and the retroactive date stays the same, the renewal generally keeps covering your earlier work, subject to the policy’s terms.