"Claims Made Policy" - The Insured is indemnified in case a claim arises during the policy period, no matter when a claim may arise, the Policy pays the insured for the Claim, provided the policy is active since its retroactive date(inception date).
Occurrence policy key date is the date of the Occurrence or accident. If that date is during the effective policy period, that policy applies. On claims made policies, the trigger date is the date the claim is made or the policy holder becomes aware of a claim being made. If that date is during the effective policy period, that policy applies. Generally claims made policies are found in professional liability policies (doctors and lawyers) as well as errors and omissions policies. Claims made policies have what's called a Retroactive Date - This is gennerally the effective date of the first claims made policy writte. This date means that the insurance carrier WILL NOT pay any claims that occur prior to that date. Furthermore, once the policy expires, any claims that have not been reported during the policy term are not covered. You don't actually have any less coverage, but you have less time to report a claim. There are endoresments you can buy to extend the claim reporting time once the policy expires. An occurrence policy will let you report a claim today on a policy that was in force 5 years ago. You generally can't do that on a claims made policy unless you purchase endorsements. The claims made policy is becoming popular for fighting construction defect claims where builders are being sued today for something they did 7 years ago. If the contractor has a claims made policy now, that policy will not respond to the claim.
Claims Made vs Occurrence Commercial General Liability and other types of Personal Liability policies are generally "Occurrence" policies. This means "losses that occur during the policy term" are eligible for claims servicing. The policy active at the time of the loss is the policy that would address coverage. Professional Liability Policies are generally "Claims Made" policies. This type of policy offers coverage for "claims made during the policy term". An injury that occurred long before the policy became active could still be covered based on the retro active coverage date.
This supplemental insurance covers incidents that occurred during the "active" period of a claims-made policy but are not brought as claims against an insured, nor reported to the insurer, by the time the claims-made policy has been terminated. Needed at various times including when leaving a claims-made carrier, upon the decision to change claims-made carriers, at the time of retirement, or due to death or total disability of the member. Tail coverage is purchased from an insured's previous claims-made carrier.
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