What is a claims-made policy?
Short answer
A claims-made policy responds to claims reported while the policy is in force, subject to a retroactive date, rather than to when the work was performed. Professional liability, tech E&O, cyber, and EPLI are almost always written this way, which is why the retroactive date and tail coverage matter.
Claims-made vs. occurrence
An occurrence policy responds to an event that happened during the policy period, no matter when the claim arrives. A claims-made policy responds to a claim reported during the policy period, no matter when the work happened, as long as the work came after the retroactive date. General liability is occurrence based; professional liability and management liability are claims-made.
The three dates that decide coverage
- Retroactive date: the earliest date of covered work. Anything before it is excluded.
- Policy period: the window in which a claim must be reported to that policy.
- Extended reporting period (tail): optional extra time to report claims after the policy ends.
Why the retroactive date matters
A firm that switches carriers without prior acts coverage can end up with a retroactive date equal to the new policy's start, leaving years of earlier work uninsured. Before changing carriers, confirm the new retroactive date matches or precedes the old one.
Common claims-made policies
- Lawyers professional liability and CPA professional liability
- Technology E&O and cyber liability
- Employment practices liability (EPLI)
- Directors and officers coverage
Common questions
- Is a claims-made policy worse than an occurrence policy?
- Neither is inherently better. Claims-made is the standard for professional liability because it prices current exposure, but it requires attention to retroactive dates and tail coverage when a policy ends.
- Do I need tail coverage if I switch carriers?
- Usually not if the new carrier grants prior acts coverage reaching back to your old retroactive date. You need tail when no carrier will reach back, such as when closing a firm or retiring.
- What happens if I let a claims-made policy lapse?
- Claims reported during the lapse have no policy to respond, and future coverage may carry a later retroactive date. A lapse can leave a permanent hole in coverage for work performed before it.
Want to know what this means for your business?
Tell us what you do and we will explain which coverage responds, which wording to check, and what to ask a carrier. No obligation, and no coverage is bound by asking.
Professional Resource Insurance Agency, LLC. CA License #0G81238. Definitions are general information, not coverage advice for a specific policy.