What does a claims-made policy cover?

A claims-made policy specifically covers claims that are made during the active policy period. This means that if a claim is reported to the insurer while the policy is in force, it will be covered, provided that the incident leading to the claim occurred after the policy’s retroactive date (if applicable). This type of coverage is particularly relevant to professional liability insurance, where the timing of when a claim is made can significantly impact coverage.

One key aspect of a claims-made policy is that it emphasizes the timing of the claim itself rather than when the incident occurred. Consequently, if a claim arises from an incident that occurred before the policy was taken out or after the policy has expired, it would not be covered under a claims-made policy.

Understanding this coverage aspect is crucial in areas such as professional liability or medical malpractice insurance, where claims might not be reported until some time after the actual incident. The nature of a claims-made policy helps ensure that both the insurer and the insured understand the importance of maintaining continuous coverage to avoid potential gaps in protection.