What does the term "claims made" insurance signify?

• A. It provides coverage regardless of the event time
• B. It only covers claims initiated before policy termination
• C. It applies coverage if the claim occurs during the policy period
• D. It continues coverage after the policy is terminated

Answer: (C)

The term "claims made" insurance specifically refers to a type of liability insurance that provides coverage for claims that are made during the policy period. This means that if an event occurs but the claim is made after the policy period is over, it will not be covered unless the policy is extended or a retroactive date is set.

For instance, if a practitioner has a claims made policy and a patient files a lawsuit within the duration of the policy for an incident that occurred while the policy was active, that practitioner would be covered. However, if the patient files the lawsuit after the policy has expired, the practitioner would generally not have coverage for that claim.

This mechanism contrasts with occurrence-based policies, which provide coverage for incidents that occur during the policy period, regardless of when the claim is filed. Understanding this distinction is crucial for professionals managing risks related to liability and claims in their practice.