Why Timely Notice Matters Under Claims-Made Liability Policies

Understanding how claims‑made policies work, and knowing when and how to report, can help businesses avoid unnecessary coverage issues and unexpected out‑of‑pocket costs.

What Is a Claims‑Made Liability Policy?

A claims‑made policy generally provides coverage when a claim is:

• First made while the policy is in force, and
• Reported to the insurer within the required timeframe

This differs from occurrence‑based policies, which focus on when the underlying incident occurred rather than when the claim is reported.

Most claims‑made policies also include a retroactive date, which sets how far back an incident may occur and still be eligible for coverage. Events that take place before this date are typically excluded, even if the claim is reported during the policy period.

Claims‑made coverage is commonly used for:

• Professional liability and errors and omissions insurance
• Directors and officers (D&O) liability insurance
• Employment practices liability insurance (EPLI)

Because coverage depends on both timing and reporting, understanding notice requirements is essential.

How Do You Know If Your Policy Is Claims‑Made?

Many businesses are not aware they have a claims‑made policy until reporting requirements come into play. Fortunately, there are several straightforward ways to identify the coverage type.

Most claims‑made policies can be confirmed by reviewing:

• The Declarations page – Policies written on a claims‑made basis are usually labeled as “Claims‑Made” or “Claims‑Made and Reported.”
• The presence of a retroactive date – A retroactive date is a strong indicator of a claims‑made policy and is typically listed on the Declarations page.
• Reporting language in the policy – Claims‑made policies focus on when a claim is made and reported, and often reference reporting deadlines or extended reporting periods.
• The type of coverage – Professional liability, errors and omissions, directors and officers, and employment practices liability policies are most often written on a claims‑made basis.

If there is any uncertainty, it is always best to confirm with your insurance agent. Knowing whether a policy is claims‑made helps ensure claims and potential issues are reported correctly and on time.