Costly Mistakes and Official Sources
Claims-made insurance gaps: retroactive dates, tails and limitation periods in Canada
How claims-made professional liability, D&O and cyber policies work in Canada, how switching insurers or retiring creates gaps, and how provincial limitation periods set how long you need cover.
A claims-made policy covers claims first made against you, and usually reported, during the policy period, for work done after the retroactive date shown on the policy. That design creates three classic gaps: switching to a new insurer that sets a new retroactive date, letting the policy lapse even briefly, and retiring or closing without an extended reporting period. Because Canadian limitation periods run from when a client discovers the problem, a claim can arrive two, three or many more years after the work. Keep your retroactive date unchanged when you renew or switch, report circumstances before a policy ends, and buy a tail when you stop.
This guide is part of the costly business insurance mistakes section.
Which policies are claims-made
| Policy | Usually claims-made? |
|---|---|
| Commercial general liability (CGL) | No, usually occurrence-based |
| Professional liability / errors and omissions | Yes |
| Directors' and officers' liability | Yes |
| Cyber and privacy liability | Yes |
| Employment practices liability | Yes |
| Pollution liability | Often |
The CGL vs professional liability guide explains the difference between occurrence and claims-made triggers.
The three dates that decide coverage
- Retroactive date. Work done before this date is not covered, even if the claim arrives during the policy. Your first claims-made policy usually sets it at the start date; later renewals with the same insurer keep it.
- Claim date. When the client first makes a written demand or serves a lawsuit, or other event defined as a "claim" in the wording.
- Reporting deadline. Most wordings require the claim to be reported during the policy period or within a short window after it.
All three must line up.
Gap 1: switching insurers
Illustrative timeline. A Vancouver IT consultancy has had E&O since 1 March 2019 with insurer A. On 1 March 2026 it moves to insurer B for a lower premium. Insurer B's policy shows a retroactive date of 1 March 2026.
In September 2026, a client sues over a database migration done in November 2025. Insurer B declines: the work predates its retroactive date. Insurer A declines: the claim was made after its policy ended. The consultancy has no cover.
How to avoid it: before switching, ask the new insurer to match your existing retroactive date ("full prior acts" or "retroactive date: 1 March 2019") and get it on the quote and policy. If it will not, either stay or buy an extended reporting period from insurer A, which is often available only within a short window after cancellation.
Gap 2: a lapse in cover
If a claims-made policy lapses for even one day, through non-payment or a missed renewal, many insurers will issue a new policy with a new retroactive date. Work done before the lapse may then be uninsured. Keep renewals on time and watch premium finance payments closely.
Gap 3: retiring, selling or closing
When you stop work, claims about your past work can still arrive. An extended reporting period (ERP), also called a tail or run-off cover, lets you report claims made after the policy ends for work done before it ended. Points to check:
- Length: one year, three years, five years or unlimited, depending on the insurer and profession.
- Cost: usually a percentage of the last annual premium, paid once.
- Limits: the ERP usually shares the last policy's aggregate rather than restoring it each year.
- Deadline: often must be bought within a set number of days after the policy ends.
Some regulated professions arrange run-off cover for retired members through their mandatory programs; check with your professional body.
How long do you need cover? Limitation periods
A claim can be brought only within the limitation period set by provincial law. The basic rules, simplified:
| Province | Basic limitation period | Ultimate limit | Source |
|---|---|---|---|
| Ontario | 2 years from when the claim was discovered | 15 years from the act or omission | Limitations Act, 2002 |
| British Columbia | 2 years from discovery | 15 years | Limitation Act |
| Alberta | 2 years from when the claimant knew or ought to have known | 10 years | Limitations Act |
| Quebec | 3 years for most claims for damages | Different rules; for injury that appears gradually or late, the period runs from when it first appears | Civil Code of Québec, articles 2925 and 2926 |
Other provinces have their own statutes, and there are many exceptions, for example for minors and for certain contract types. The practical message is that discovery can come years after the work, so a claim against an architect, engineer, accountant or IT provider may arrive long after the job. A tail of only one year may be too short.
Notice of circumstances: protecting yourself before a claim
Most claims-made policies let you report circumstances that could lead to a claim, such as a client complaint, a missed deadline or a discovered error. Once accepted, a later claim arising from those circumstances is treated as made during that policy. Before your policy ends or you switch insurers:
- List any complaints, errors or disputes that could become claims.
- Report them in writing to the current insurer, with dates and details.
- Keep confirmation of the notice.
The new insurer will also ask about known circumstances on its application, and will usually exclude them; that is why the notice to the old insurer matters. See disclosure and misrepresentation.
Checklist before renewing or switching a claims-made policy
- Retroactive date on the new quote matches the current policy
- No gap between expiry and new start dates
- Known circumstances reported to the current insurer
- Extended reporting period option and deadline noted
- Defence costs inside or outside the limit understood (in Quebec, Civil Code article 2503 applies)
- Aggregate limit and whether an ERP shares or restores it
Frequently asked questions
Does my CGL have a retroactive date?
Usually not, because most CGL policies are occurrence-based. If your CGL is written on a claims-made form, the same rules apply.
Can I buy a tail after the policy has ended?
Sometimes, within a short window set by the policy. After the window closes, it is usually unavailable.
What happens if I report a claim late under a claims-made policy?
If the policy requires reporting within the policy period or a defined window, late reporting may defeat the claim entirely. Report promptly, and if the insurer refuses on that ground, see denied claims and complaints.
Will my new insurer cover a claim from work I did years ago?
Only if its retroactive date is earlier than that work and you did not know of the problem when you applied.
Sources
- Ontario e-Laws — Limitations Act, 2002
- BC Laws — Limitation Act of British Columbia
- Alberta King's Printer — Limitations Act of Alberta
- LégisQuébec — Civil Code of Québec, prescription and insurance articles
- Insurance Bureau of Canada — professional liability information
