What defines the extent of coverage in time for claims-made liability until all claims are settled?

The retroactive date in a claims-made liability policy is crucial because it establishes the timeframe in which incidents must occur in order to be covered by the policy. This date marks the point after which any claims brought forward are eligible for coverage. Essentially, if a claim arises from an incident that happened after the retroactive date and within the policy’s effective period, it will be considered for coverage.

In claims-made policies, this date helps define the limits of coverage and ensures that only claims originating from covered incidents are compensated. It protects the insurer from unforeseen claims resulting from events that occurred before the retroactive date. Therefore, the retroactive date creates a safeguard for both the insurer and the insured by clarifying which claims are valid based on when the incidents occurred, all while emphasizing the importance of the effective period for settling those claims.