A claims-made form covers liability claims only when the incident and the claim itself are both reported during the active policy period.
Understanding the Claims-Made Form
Liability insurance can be written in a few different ways, and one of the most common formats is the claims-made form. This type of insurance doesn’t just look at when something happened — it also looks at when the claim was actually filed.
With a claims-made form, the insurance company will only pay for a claim if two things happen during the same policy period:
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The event or incident that caused the claim takes place.
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The claim is officially reported to the insurer.
If either of these happens outside the policy window, the policy generally won’t cover it. That’s what makes claims-made coverage different from other forms, especially occurrence-based policies, which cover events that happen during the policy term even if the claim is reported years later.
In short, a claims-made form requires both the accident and the claim filing to fall within your policy dates.
How the Claims-Made Form Works
At first, this type of coverage may sound a little strict. But it’s actually very common in professional liability insurance, such as coverage for consultants, therapists, accountants, and even some medical professionals.
Here’s the basic idea:
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Your policy must be active when the incident happens.
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Your policy must also be active when you report the claim.
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If the policy expires and you report the claim later, it usually won’t be covered unless you purchased extra protection.
Because of this timing rule, claims-made insurance requires policyholders to pay close attention to dates and renewal decisions.
Why Insurers Use Claims-Made Forms
There are a few reasons why insurers offer this type of liability coverage:
Predicting Costs More Easily
When claims must be reported right away, insurers have a clearer picture of how much money they need to set aside. This makes pricing the insurance more predictable.
Encouraging Early Reporting
Since a claims-made form requires prompt reporting, policyholders are more likely to notify their insurer quickly when something happens. This helps the insurer investigate while details are still fresh.
Managing Long-Tail Risks
Some liability claims can surface months or years after an incident. The claims-made approach limits how far back insurers must go to cover past events.
Real-Life Examples of a Claims-Made Form
To understand it better, let’s look at a few simple examples:
Example 1: Consultant Services
A marketing consultant gives advice in March while insured under a claims-made policy. The client later says the advice caused financial loss and files a claim in June — still within the same policy year.
Because both the incident and the claim happened during the policy term, the policy covers it.
Example 2: Late Reporting
A therapist has a claims-made policy active from January to December. A client claims harm from a session that happened in July but does not report the claim until February of the following year.
Even though the incident happened during the policy term, the claim was reported after the policy expired — so it’s likely not covered.
Example 3: Switching Insurers
An accountant changes insurance companies. If a claim comes in later about work done under the previous insurer’s policy, it may not be covered unless the accountant purchased “tail coverage” (extended reporting protection).
Extra Protection: Tail Coverage
Because claims-made forms can leave gaps when a policy ends, many people buy tail coverage, which extends the time you can report a claim after the policy expires. The incident still has to happen during the original policy term, but a tail gives you more time to notify the insurer.
This is especially helpful when switching insurers, retiring, or closing a business.
Final Thoughts
A claims-made form is a useful liability insurance option, but it works differently from other types of coverage. It only pays when the incident and the claim both fall within the active policy period. Understanding this timing rule helps you avoid unexpected gaps and choose the right protection for your needs.
By knowing how a claims-made form works — and when you may need extra reporting time — you can manage your liability risks with much more confidence.
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