E&O retro date - going from individual to corporation

[Rob]

If an insured is a consultant who has E&O and is an individual since 2004 for example, then incorporates (still himself only) and then renews and the renewal policy shows the named insured as the corporation with a retro date of 2004, should there be a concern about prior acts coverage when he was an individual since the renewal policy shows the corp as the named insured?

[pita3333]

Off the top of my head . . . Seems to me that the key question is ...is his name (as individual) included in the named insured?

If not...then he does not have continuing coverage for his individual exposures and likely should have purchased a tail as the individual. How is the policy addressing jobs in progress? I am sure that he very likely had open jobs that were started as an individual that he will complete as a corp.

If the retro remains 2004 for the corp...that is a good thing!

The truth is that you would still need to review the policy forms to get a better answer. Specifically "who is an insured".

[Rob]

We are in the process of renewal and are attempting to make the named insured the corporation and the individual. The retro date for the corp goes back to the original retro date. The underwriter said " The form of business the insured chooses has no bearing on the retro date. Whether he is an individual, a partnership, an LLC or a corporation does not impact the retro date. If there were a change in operations or ownership between the insured and another individual we might want to note that, but that does not seem to be the case."

[jon04]

if this was my insured, i would ask the underwriter to list the individual as an aditional insured, just to cover all basis.

[Rob]

if this was my insured, i would ask the underwriter to list the individual as an aditional insured, just to cover all basis.

The underwriter has agreed to list the individual and the corp as the named insured.

[pita3333]

if this was my insured, i would ask the underwriter to list the individual as an aditional insured, just to cover all basis.

Personally I would want the individual to be a NAMED insured...not additional insured. Again...if an A/I need to review the form to see how the coverage applies to an A/I. We all (should) know that there is a difference between NAMED and ADDITIONAL insured.

[Rob]

if this was my insured, i would ask the underwriter to list the individual as an aditional insured, just to cover all basis.

Personally I would want the individual to be a NAMED insured...not additional insured. Again...if an A/I need to review the form to see how the coverage applies to an A/I. We all (should) know that there is a difference between NAMED and ADDITIONAL insured.

See my message above, they will name ind as named insured as well as the corp.

[mightyquinn]

I've had this situation. Proprietorship for 3 yrs and then inc'd.

After you inc your E&O should show as Insureds both your current inc name and your former proprietorship name.

If you purchased E&O when you were a proprietor you could still be sued for something that occurred from that period. As such its important for you to include both names and retain your original Retro date from your proprietorship days.

If you did not purchase E&O until after you inc'd it is unlikely that you will find an underwriter willing to waive the Prior Acts clause and extend your coverage to the proprietorship.

[kevinraz]

Rob - Nobody has said this yet but it sounds like you have this covered correctly now.

From what you are saying the dec page should look something like this:
Joe Smith, Individual, retro date 2004
Joe Smith Inc, retro date 2004

Sounds like the underwriter was reasonable and slightly generous to effectively backdate the retro for the corporation. As a former underwriter I'd probably do the same thing, does not really add anything to the exposure that I can think of.

[ffisher]

Having done it myself, i.e., Incorporating form a proprietorship, I had an endorsement on the Corp Go Forward policy that expressly named the proprietorship as a n additional named Insured with the appropriate Retro date specified.

Having a problem- - you need an E&O specialist Like us to help-

Fred Fisher CEO
ELM Insurance
ffisher@e-o.com

www.e-o.com

[Rob]

Rob - Nobody has said this yet but it sounds like you have this covered correctly now.

From what you are saying the dec page should look something like this:
Joe Smith, Individual, retro date 2004
Joe Smith Inc, retro date 2004

Sounds like the underwriter was reasonable and slightly generous to effectively backdate the retro for the corporation. As a former underwriter I'd probably do the same thing, does not really add anything to the exposure that I can think of.

I used your suggestion but the underwriter said "The problem with using the retro date as shown is that there was no Joe Smith, Inc. in 2004. If the insured is so concerned about this we can go with a split retro date of 2004-2009 for Jim Smith then 2009- Jim Smith, Inc."

So if we did Joe Smith, Individual, retro date 2004 and Joe Smith, Inc. retro date 2009, can you think of any gaps that can exist as a result?

[kevinraz]

Rob - I can't see any issues. Suing Joe Smith Inc for anything prior to 2009 would not be possible as the entity did not exist.

[Rob]

Rob - I can't see any issues. Suing Joe Smith Inc for anything prior to 2009 would not be possible as the entity did not exist.

I think it might be better to not even spell that out and just have the ind and corp as named insured with a generic 2004 retro date on the policy. They are willing to do that. Do you agree? Thanks for the replies.