What is a Claims-Made Insurance Policy?

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Hello… I’m Ryan Hanley, Director of Marketing for the murray group insurance services… and today we’re dipping into the mail bag.

Today’s question comes from Sara who owns a small professional firm just outside of Saratoga, NY…

Sara asks, “Dear Ryan, what is a claims-made insurance policy?”

I love that Sara asks this question because it means she’s looking deeper into her insurance policies… in this case, her professional liability policy.

A claims-made insurance policy is commonly used with professional liability insurance such as directors & officers’ insurance, accountant’s or legal liability insurance, and errors & omissions policies. In a claims-made insurance policy, coverage is triggered by the date the insured first became aware of the possibility that a claim may have occurred (this is the incident) and the insured has notified their insurance carrier of such knowledge.

The insurance policy in force on the date the insured was made aware is the insurance carrier that will respond to the claim. The policy period for a claims-made policy extends backwards to the “retroactive date” which is usually the date of the very first professional liability policy you purchased for your business.

Therefore, the policy will provide coverage for claims made today stemming from actions or events all the way back to that retroactive date.

A claims-made policy requires the claim be made during the policy period or an extended reporting period of an inforce policy. The most widely used claims-made policy provides coverage only for losses which: (a) occurred after the retroactive date and, (b) were reported during the policy period or extended reporting period.

Most professional liability insurance carriers have begun to get away from claims-made policies in exchange for occurrence policies which are very similar, it not in some cases handled the same as general liability or Business Owners insurance policies.

Sara, thank you for your question… this is a very important topic for anyone with professional liability insurance to understand.

If you would like to submit an insurance related question, be it personal, business or life insurance related please use the comment section below this video and I’ll make sure to get an answer to your question.

…and if you haven’t already click the box on my right to download your copy of 37 FREE Home Maintenance Tips Guide that will improve the value of your home and reduce the chance of experiencing an insurance claim. All the tips are relatively basic but will definitely help you keep money in your pocket where it belongs…

I’m Ryan Hanley… Have a great day.


oagaitan says:

Ryan, thanks for the explanation. I have a question: what does the general
aggregate limit cover in an insurance policy? Can you give me an example?
Thank you for your help!

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