A claims-made insurance policy generally responds to claims first made against the insured during the period of insurance and notified in accordance with the policy requirements.

Professional Indemnity Insurance is a common example of claims-made insurance.

Claims-made cover can also appear within particular sections of other insurance policies.

For example, depending on the wording, a Products Liability section within a combined Public and Products Liability policy may operate differently from the Public Liability section.

This is why it is important to check each section of a policy rather than assuming the entire policy uses the same claim trigger.

Why does the policy period matter? #

Unlike an occurrence-based policy, it is not necessarily enough that you held insurance when the work was performed or the product was supplied.

You generally need an appropriate claims-made policy in force when the claim is made, subject to matters such as:

• The retroactive date
• The policy’s notification requirements
• Any known circumstances
• Continuous cover provisions
• The terms and exclusions of the policy

What is a retroactive date? #

The retroactive date determines how far back your policy may respond to acts, errors, omissions or other insured activities occurring before the current policy period.

For example, a policy with unlimited retroactive cover may potentially respond to eligible earlier activities, subject to the policy terms and any prior known circumstances.

A restricted retroactive date can limit cover for earlier activities.

What about known circumstances? #

Claims-made policies commonly require known claims or circumstances that may give rise to a claim to be disclosed or notified.

This is particularly important when:

• Changing insurers
• Renewing a policy
• Selling a business
• Closing a business
• Retiring

What happens if I stop trading? #

For certain claims-made risks, claims can arise after the relevant work or activity has ceased.

Depending on the type of insurance, run-off cover or another form of continuing protection may therefore need to be considered.

Claims-made insurance can be complex, so continuity of cover, retroactive dates and notification obligations are important.

If you are changing insurers, closing a business or have become aware of a potential claim, contact our team before making changes to your policy.