Claims Made Policies Definition

A claims made policy is insurance coverage that protects the insured against claims arising from events that occurred during the policy period. The key feature of this type of policy is that it only provides coverage for claims that are reported to the insurer during the policy period, regardless of when the underlying event took place.

This type of policy is typically used by professionals such as lawyers, doctors, and accountants who may be held liable for their actions long after the event took place. For example, a doctor who treats a patient for cancer may not be sued until years later, after the patient dies. If the doctor has a claims made policy in place, the insurer will provide coverage for any claim arising from the treatment, even if it is filed years after the policy period has ended.

There are two main types of claims made policies: occurrence-based policies and reporting-based policies. Occurrence-based policies provide coverage for any claim that arises from an event that took place during the policy period, regardless of when the claim is filed. Reporting-based policies, on the other hand, only provide coverage for claims that are reported to the insurer during the policy period.

Claims made policies can be either primary or excess. A primary claims made policy provides first-dollar coverage, meaning that it pays out benefits before any other insurance policies come into play. An excess claims made policy provides secondary coverage, meaning that it pays out benefits only after another insurance policy has been exhausted.