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Claims made policies must have an occurrence occur and be reported to the carrier within the policy period. The tail protects against claims made subsequent to the effective termination date of the occurring policy period.
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What is tail coverage?
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.
What is the difference between a full occurrence policy vs a full occurrence with manifestation vs occurrence with manifestation and sunset clauses?
Claims Made Vs Occurrence Policies There are two primary forms of liability insurance policies - claims-made and occurrence policies. Most professional liability insurance, including directors and officers and employment practices liability insurance, is written on a claims-made basis.An occurrence policy obligates the insurance company to pay for claims arising out of occurrences during the policy period regardless of when the claim is reported. The policyholder is covered for any incident that occurs during the term of the policy regardless of when the claim arising from the incident is reported to the company. In some situations the claim might be made many years after the incident occurred. This leads to uncertainty for both the insured and the insurer.A claims-made policy protects an insured against claims or incidents that are reported while the policy is in force. Normally, a claims made policy provides coverage for acts occurring prior to the claims-made policy period. Coverage for acts occurring prior to the policy period is called "prior acts coverage," and the period prior to the policy period for which claims are covered is called the prior acts period. Prior acts coverage is usually only provided when a claims-made policy has been in force immediately prior to the current claims-made policy on a basis consistent with the prior policy. Prior acts coverage is defined as "full prior acts", covering acts occurring at any time prior to the current policy period, or is defined by a "retroactive date." When a retroactive date is used, prior acts coverage is provided from the retroactive date to the current policy period.
What is the difference between a claims made and occurrence general liability policy?
Claims Made vs OccurrenceCommercial 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.
What is definition of retro date on insurance policy and prior and pending litigation date?
These are dates used in claims made insurance.Retro date - Policy covers any claim alleging facts occurring after this datePrior & Pending Date: Covers all claims made after this date (no coverage for claims known at policy inception)
Can an insurance provider drop your daughter from the policy and then request reimbursement for payouts made on her behalf?
Yes, if she did not have valid coverage at the time the claims were submitted.
What if your firm has claims made malpractice insurance and claim is submitted 15 years later by a minor is there a provision that affords coverage if you have changed carriers?
Yes, Typically, If you changed companies without any lapse in coverage, the company or your agent will have maintained your retroactive date. If so, then you are covered by your current policy. If you had a lapse in coverage between insurance companies, then you may have lost your retro-date resulting in no coverage under your current policy for losses that occurred prior to that time.Look at you policy declarations page for the term "Retro Date". Any claims presented for occurrences after this date will be covered under the current policy, even if it was over 15 years ago and regardless of who your insurer was at the time.It is very important to maintain our retroactive coverage date when changing companies with professional liability insurance.AnswerYes. Either you were covered by the tail coverage you purchased when changing to the new company (effectively converting that original policy from claims made to occurrence), or you set up the new policy with dates such that claims made in year 15 from occurrences happening in the prior policy were still covered. Taking the latter course would mean that you weren't paying significantly less for coverage in the first year you made that change. Please ask again if you have a follow up question regarding this scenario.
After closing down a construction company.. do you need to continue to maintain liability insurance coverage for potential claims from the past?
The type of policy you have will determine if you need to keep coverage in place or not. There are occurrence forms, which cover situations that occur during the policy period, and there are claims made policies, which cover claims that are made during the policy period. Claims made policies may cover situations that happened before your policy started. Either way, there is a statute of limitations on how long someone has to make a claim against you. This statute varies from state to state, it is recommended that you check with the department of insurance. Usually it is 1 to 2 years.
Claims made versus occurrence policy?
When a policy is written on a "claims-made" basis, it means that the policy in force at the time a claim against the insured is asserted applies to the claim, regardless of when the occurrence forming the basis of the claim occurred. Correlatively, the policy must be in force at the time that the claim is make for coverage to apply. The insured must also timely report it and follow all conditions precedent outlined in the policy while it is in force. There is a variant of a claims made policy, which may be set forth in an endorsement to the policy, that provides for a "retro" date. This means that the policy will apply to occurrences that took place prior to the inception of the policy (if they otherwise fall within the ambit of coverage).With an "occurrence" based policy, even though the policy may have expired as of the time the insured received notice of the claim, the policy will afford coverage if the claim otherwise comes within the scope of coverage. This type of policy also has claims reporting provisions to which the insured must adhere, as well as a cooperation clause. The latter means that the insured must cooperate with the insurer (and the attorney it selects to defend that claim) in the defense.Both forms of coverage have advantages and drawbacks, depending on the circumstances. It is difficult to predict whether, in any particular instance, it will be advantageous to insure using one form or the other. Only in hindsight can a judgment be made.Advantages of "occurrence" policies"Occurrence" policies are sometimes like "money in the bank," in that you can go back to old policies, years after they have lapsed and put a claim against them for incidents that happened while they were in force. Old policies should never be thrown away. They should be kept in a place of safekeeping.You don't have to worry about canceling an "occurrence" policy and moving to a different insurer. Coverage remains locked in for incidents occurring while the policy was in force, as long as the insurer is in business. In contrast, once a "claims-made" policy is cancelled, it is possible that purchasing insurance for past events will become difficult, expensive or perhaps not possible.Sometimes courts will find occurrences in successive policies if there is continuing harm. This can have the effect of accumulating limits over a period of years. With "claims-made," only one limit applies; that in force when the claim is actually made.Disadvantages of "occurrence" policiesInsurance companies that wrote policies in previous years may no longer be in business. With "claims-made" policies, the insurer is much more likely to be around when a claim becomes payable. The length of time between an occurrence and resolution in court can be 20 or more years. An insurer in business 20 years ago may not be in business today. The only way to mitigate this risk with "occurrence" insurers is to change to a different one every few years so that you do not keep "all your eggs in one basket."The limits on an "occurrence" policy are likely to be inadequate if a claim is made twenty years after a policy has expired. With "claims-made" it is easier to arrange a limit which is adequate for today's exposures.For malpractice exposures written on an "occurrence" basis it is important to arrange limits which are somewhat more than is necessary in order to meet tomorrow's exposures. On a "claims-made" basis, one does not need to project twenty years or more into the future when setting limits; 7 years is usually the longest time it takes for a case to go through the court system, so even though you still need to project into the future, the length of time is much less.Advantages of "claims-made" policiesLimits can be predicated on today's exposures more accurately than with "occurrence" policies, so there may be less of a likelihood of being underinsured.Disadvantages of "claims-made" policiesCoverage is triggered by an actual claim for damages, not a notice of an "occurrence" or "incident." However, the date of the occurrence or incident must be more recent than the retroactive date of the policy. This retroactive date determines the cut-off date for claims: if the incident occurred before the retroactive date, the insurer has no obligation and the insured no coverage. While the claim has to be made during the policy period, the occurrence which gave rise to the claim has to fall after the retroactive date of the policy. A "claims-made" policy wording covers as follows:This insurance does not apply to "bodily injury" or "property damage" which occurred before the retroactive date, if any, shown in the Declarations.A "claims-made" policy can have:No retroactive date (the broadest coverage).A retroactive date that pre-dates the policy inception date (this may range from days to years). Ideally, it should go back at least to the expiration date of your last "occurrence" policy. If it goes back further it can be designed to provide top-up cover in the case of different limits.A retroactive date that is the same as the policy inception date - this is the most limited coverage and excludes any claim for damages that occurred prior to the policy inception. It is acceptable only if prior to this policy "occurrence" coverage was in force or full "tail" coverage has been purchased on any previous "claims-made" policy.Ideally, you want no retroactive date or one that includes the entire period that you have had "claims-made" coverage. Anything less makes you effectively self-insured for any claims for injuries or damage that occurred during prior claims-made policy periods which you have not reported to your insurer at the time of the occurrence (unless such claims are covered by supplemental "tail" coverage).The first claim for damages determines which policy applies. For example, if a person first makes a claim for medical payments in 1986, then files for additional damages in 1988, both claims activate the 1986 claims-made policy.With "claims-made" basis of coverage, should the policy ever be allowed to lapse or be cancelled, the insured is generally given the option of purchasing coverage, for a stated period following the expiration of the policy (extended reporting period). Any "claims-made" during this extended reporting period month period would then be covered if it otherwise comes within the scope of coverage. With "occurrence" policies you can be less concerned with coverage lapses or insurer changes.If coverage terms ever become more restrictive on subsequent renewal of a "claims-made" policy, the new terms apply retroactively to the original retroactive or inception date.
What does retro active date mean in an insurance policy?
The retroactive date is the date from which coverage is deemed valid. Retro active dates are most common in professional lines ( claims Made ) policies and indicate the beginning coverage date from which there has been no lapse. You will not find a retroactive date on an occurrence policy
Is professional liability covered under a commercial general liability policy?
Normally it is not covered by a CGL policy. However some carriers can add this coverage by endorsement. The recomendation would be to buy a stand alone professional policy. they normally provide broader coverage. Review the policy carefully as these can be very complicated and are normally written on claims made basis instead of a occurrence form. Make sure you clearly understand the differences or you could be caught without coverage at some point in time.
What is the difference between occurrence based insurance and claims based insurance?
There are two basic policy forms offered by malpractice insurers, claims made and occurrence. Occurrence coverage is the most desirable form of coverage, but it is not available in all states. An occurrence policy is complete when you purchase it and on cancellation continues to provide coverage for future claims based on conduct that took place during that policy term. The limits that are available to pay a claim are the limits that were in place during that policy term that the service was rendered. Premiums for this product are level except to the extent that a company may increase or decrease premiums over time. Claims made policies provide coverage only so long as the insured continues to pay premiums for the initial policy and any subsequent renewals. If one is insured by a claims made policy for five years and stops paying premiums, coverage ceases for any cases that the company did not accept during the policy term. To lock in coverage forever under this policy form, an insured must purchase an Extended Reporting Endorsement (called a "tail"). This endorsement allows an insured to continue to report claims after the policy is cancelled. Tail premiums usually range from 100% to 500% of the mature premium (see below) and the premium is usually due as a single payment shortly after cancellation of a policy. However, one can move between claims made insurers without purchasing a tail. If a professional desires to change insurance companies, often the new insurer will take over the predecessor insurance company's responsibilities by writing its policy retroactively over the previous insurer. It picks up the retroactive date, the first date of coverage, offered by the previous insurer and charges a premium based on the number of previous years of coverage needed. Claims made policies have premiums that increase annually usually over a period of five years; the fifth-year premium is referred to as the "mature premium." When writing retroactive coverage, the new insurer's premium usually does not exceed its mature premium for this specialty. Many insurers offer a free tail if an insured dies, is totally disabled or retires from practice after five years of coverage with that company at a minimum age of 55. If this feature is not included in your policy, you ultimately need to purchase a tail to maintain indefinite coverage after you stop working. Moving from one claims made insurer to another may be difficult for health care professionals relocating to a new state because many malpractice insurers are regional and do not want to assume retroactive coverage out of its geographic area. As with any overview, this insurance information is general and intended to help you make informed decisions. The actual policies available in your state may contain features not discussed above. An insurance policy is a contract between you and an insurance company. You should read and understand any policy that you purchase. If you have any questions, have the company or insurance broker or agent take as much time as you need to explain policy terms to your satisfaction.
What are the components of a typical professional liability policy?
Claims-made: A type of professional liability insurance policy that covers injuries/damages only if the injury occurs in the policy period and only if the claim is reported or filed to the insurance company during the policy period or during the tail.Occurrence basis: Professional liability insurance policy that covers injuries/damages that occur during the period covered by the policy even though the claim may be reported or filed outside the policy period.Tail coverage: An uninterrupted extension of the insurance policy period, also known as the extended reporting endorsement.Umbrella coverage: Coverage purchased in addition to a basic liability policy that provides additional amount limits and/or adds coverage for events not covered in the basic policy.
