insurance

Claims-Made Policy

An insurance policy that covers claims only if they are made (reported) during the policy period, regardless of when the actual incident occurred. This is different from occurrence-based policies that cover incidents based on when they happened.

Example

“Dr. Martinez's malpractice insurance is a claims-made policy, so even though the surgery happened in 2022, she's covered because the lawsuit was filed in 2023 while her policy was active.”

Memory Tip

Think 'Made during my time' - Claims-MADE policies only work if the claim is MADE while you're covered, like being present when someone calls your name.

Why It Matters

Understanding whether your policy is claims-made or occurrence-based is crucial for professionals like doctors, lawyers, and consultants. With claims-made policies, you could lose coverage for past work if you don't maintain continuous coverage or purchase tail coverage when switching insurers.

Common Misconception

People often assume that as long as they had insurance when an incident occurred, they're covered. With claims-made policies, you must also have active coverage when the claim is actually filed, which could be years later, making continuous coverage essential.

In Practice

Attorney Lisa has a claims-made malpractice policy from 2020-2023. In 2022, she makes an error in a client's case, but the client doesn't discover it and sue until 2024. Since Lisa's policy expired in 2023 and she didn't buy tail coverage, this claim isn't covered even though the error happened during the policy period. She must pay the legal defense costs and any settlement out of pocket.

Etymology

The term emerged in the 1960s in professional liability insurance to describe policies triggered by when a claim is made rather than when the negligent act occurred.

Common Misspellings

claims made policyclaim-made policyclaims-make policyclaimes-made policy

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