What is a claims-made policy?

A claims-made policy is structured to offer coverage specifically for claims that are made during the active policy period, regardless of when the incident that led to the claim occurred. This type of policy is particularly relevant in professions that face potential delays between an event occurring and the subsequent claim being reported.

For instance, if a policyholder faces a lawsuit due to an event that happened prior to the start of the claims-made policy, but the lawsuit is filed while the policy is active, coverage will typically apply if the policy includes retroactive coverage back to a certain point, known as the retroactive date. However, if the claim is made after the policy has expired, then the claim may not be covered unless a renewal or extended reporting period provision is in place.

The structure of a claims-made policy emphasizes the importance of timing in reporting claims and highlights how insurance coverage can vary based on when the claim is made, rather than when the event causing the claim took place. This makes it distinct from occurrence policies, which provide coverage for events that happen during the policy period, regardless of when the claim is made.