Continuity Date
A Continuity Date is the earliest date from which you have maintained continuous coverage under a claims-made liability policy without any gaps. It's similar to a retroactive date and establishes how far back in time your current policy will cover claims. Letting coverage lapse or switching insurers without prior acts or tail coverage resets this date, leaving no coverage for incidents before it.
What You Need to Know
Claims-made policies only cover claims reported during the policy period for incidents that occurred after the continuity date. Maintaining the same continuity date through a policy change requires purchasing prior acts coverage; letting coverage lapse resets it to the new policy's start date.
Common scenarios that reset continuity dates:
- Switching EPLI carriers to save money without purchasing prior acts coverage
- Letting claims-made coverage lapse due to budget constraints, then reinstating later
- Selling the restaurant and new owners starting fresh policies without prior acts coverage
- Changing business entity type without maintaining coverage continuity
Prior acts coverage vs. tail coverage: prior acts coverage extends your new policy's coverage back to your original continuity date, while tail coverage is purchased from your old insurer and covers future claims for past incidents. Either option preserves your lookback period when switching carriers.
Why It Matters for Restaurant Owners
For restaurant owners who carry claims-made policies like Employment Practices Liability Insurance, understanding your continuity date is critical because employment-related claims often arise months or years after the actual incident. An employee terminated one year might not file a wrongful termination lawsuit until well after you've switched carriers.
Questions to ask before switching insurers:
- What is my current continuity date?
- Will the new policy include prior acts coverage back to my current continuity date?
- What is the cost to maintain my existing continuity date?
- If I don't purchase prior acts coverage, what date will my new continuity date become?
Never let claims-made coverage lapse, even briefly, and always ask explicitly about continuity dates before switching insurers or canceling coverage.
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