What does "claims-made" refer specifically in an insurance policy?

The term "claims-made" specifically refers to a type of insurance coverage that provides protection for claims that are reported during the policy period, regardless of when the incident that gave rise to the claim occurred, as long as the incident happened after the policy's retroactive date. This means that if an insured party receives a claim for an event that occurred while the claims-made policy was active, they are covered, provided they report that claim while the policy is still in force.

This type of coverage contrasts with occurrence-based policies, which cover claims related to incidents that occur during the policy period, regardless of when the claim is made, as long as the policy is active during the occurrence. The focus on when claims are reported in claims-made policies is a crucial distinction that typically affects the premiums, coverage terms, and ease of managing potential liabilities.

Claims-made insurance is commonly used in professions that have a high risk of claims over time, such as medical malpractice. Understanding this concept is vital for professionals in the insurance field, particularly when advising clients on risk management and policy selection.