What is a 'claims-made' policy?

A 'claims-made' policy is defined as one that provides coverage for claims made during the policy period, regardless of when the incident occurred that led to the claim. This means that coverage exists only for claims that are formally reported to the insurer while the policy is active.

This form of insurance is particularly relevant in professional liability scenarios, where events leading to claims may happen well before they are reported. The key element of claims-made policies is the timing of the claim notification; it is sufficient that the claim is made, not necessarily when the incident that caused the claim took place.

In contrast, a policy that covers claims occurring during the policy period focuses on the actual time of the incident rather than the reporting of the claim. Therefore, while it addresses claims arising from events within a specified timeframe, it does not capture the unique structure of a claims-made policy. Additionally, a policy that covers past claims regardless of duration does not align with the principle of claims-made coverage and would imply a broader scope than typically defined in this context. A policy effective only for the first year would not accurately reflect the ongoing nature of claims-made coverage which can be renewed or modified, depending on the terms of the policy.

Thus, the defining characteristic of a claims-made