Also known as prior acts coverage or retroactive date, nose coverage can protect you from future legal issues related to your past professional work. Coverage usually starts from the date you bought the insurance, meaning nose coverage doesn’t necessarily protect you from problems that happened before that date.
Let’s use an example:
Say you’re a management consultant and you buy professional liability insurance. Your nose coverage date is January 1, 2023.
You find out a client wants to sue you for negligence. However, you offered services to this client in December 2022. Because this is before the starting date of your nose coverage, the insurance company won’t cover any damages or legal fees.
But if it’s a client that you consulted for after the starting date, then the insurance company can give you coverage.
These coverages are related but serve different purposes:
Tail coverage can protect you from claims made after your policy expires, while nose coverage can help cover you for mistakes made before you had coverage.
Nose coverage is significant for small businesses because it safeguards them from potential legal claims and liabilities related to past work — as long as it falls after the policy’s starting date. It helps protect their reputation, financial stability and peace of mind, allowing owners to concentrate on running and growing their businesses without worrying about unexpected legal issues arising from their past professional activities.
NEXT offers affordable, custom business insurance to suit your business needs. Simply answer a few questions online and receive your tailored instant quote within 10 minutes. Once you’ve purchased your insurance, you can immediately access your certificate of insurance and share it 24/7 via the NEXT app.
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