Retroactive period in the insurance business

The conditions of modern insurance allow you to apply various methods of covering possible losses. One of the methods used is the insurance of the past - the so-called insurance in the retroactive period. This kind of compensation is used in contracts concluded between legal entities in various areas of economic activity.

What is a "retroactive period"?

The period of validity of the insurance policy, agreed upon by both parties, is called the retroactive period. The insurance period starts on the dates preceding the date of conclusion of the insurance contract, and ends with the date of the policy statement. All insured events occurring in a given period are covered from the amount of insurance compensation.

Typical items in the insurance contract

In insurance contracts, the retroactive period of insurance is a time factor on which the payment of compensation for the event that occurred before the signing of the contract depends.

There are two types of this period:

• Annual basis of the contract. In this case, the date of the insurance period report starts from the moment the organization is allowed to perform the work. The damage covered in the event of an insured event must be caused not earlier than three years before the insurance period.
• The project base of the contract. The retroactive period is counted from the beginning of the work.

Consideration of claims

Priority direction of implementation (insurance after the fact) is construction, insurance of financial risks.

The essence of compensation is to compensate for losses that have been identified by already performed work. However, this rule is effective only if, at the time of registration of the insurance policy, the beneficiary was not aware of the existing miscalculations and should not have known (did not receive letters, orders or service notes on the fact of finding the deficiencies).

The issue of including the last period of the insurance coverage was repeatedly considered by arbitration courts. But the basic rule is that a retroactive period can be considered as such only if the parties agree. Even if the parties assume the existence of such an item, but do not include it in the insurance conditions, damages may be refused.

If the insured person knew about the mistakes made, nevertheless bought the policy, then such actions are regarded as fraud.