A claims-made policy, also known as a discovery policy, is an insurance contract that provides coverage for claims made during a specific period, regardless of when the incident occurred. This means that even if the incident happened before the policy was in effect, the policy will still cover any claims made during the policy period.
A claim-made policy is a specific type of insurance policy that offers coverage for claims made within a specified time frame, regardless of when the incident actually took place. This means that if a claim is made during the policy period, it will be covered by the policy, even if the incident occurred before the policy was active. For instance, if a doctor has a claim-made policy and a patient sues them for malpractice during the policy period, the policy will provide coverage for the claim, regardless of when the alleged malpractice took place. Similarly, lawyers with claim-made policies for professional liability insurance will be covered if a client sues them for legal malpractice during the policy period, regardless of when the alleged malpractice occurred. Claim-made policies are commonly utilised in professional liability insurance, including medical malpractice insurance, errors and omissions insurance, and directors and officers liability insurance. They differ from occurrence policies, which offer coverage for incidents that happen during the policy period, regardless of when the claim is made.
A claims-made policy is a type of insurance policy that provides coverage for claims made against the insured during the policy period. It only covers claims that are reported to the insurance company while the policy is in effect.
Unlike an occurrence policy, which covers claims that arise from incidents that occurred during the policy period, a claims-made policy only covers claims that are reported during the policy period, regardless of when the incident occurred.
A retroactive date is the date from which the claims-made policy provides coverage for claims arising from incidents that occurred before the policy’s inception. Claims arising from incidents before the retroactive date are not covered.
In some cases, it may be possible to extend the retroactive date of a claims-made policy by purchasing an endorsement or a new policy. However, this is subject to the insurer’s approval and may result in higher premiums.
When switching from a claims-made policy to an occurrence policy, it is important to obtain “tail coverage” or an “extended reporting period endorsement” to ensure continued coverage for claims arising from incidents that occurred during the claims-made policy period.
Yes, claims-made policies often have limitations such as a “prior knowledge” exclusion, which denies coverage for claims known to the insured before the policy’s inception. It is important to review the policy terms and conditions to understand the limitations.
Generally, claims-made policies cannot be canceled mid-term. However, you may be able to negotiate a cancellation with your insurer, but it is subject to their approval and may result in penalties or fees.
If you fail to report a claim within the policy period of a claims-made policy, it may not be covered. It is crucial to promptly report any potential claims to your insurer to ensure coverage.
Yes, you can switch insurers while on a claims-made policy. However, it is important to obtain “prior acts coverage” from the new insurer to ensure continued coverage for claims arising from incidents that occurred during the previous policy period.
To ensure continuous coverage under a claims-made policy, it is important to renew the policy each year and report any potential claims promptly. Additionally, consider purchasing “tail coverage” or an “extended reporting period endorsement” when switching insurers or transitioning to an occurrence policy.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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