Claim of Policy

Two different types of approaches are used by insurers to determine the coverage in terms of liability of an insurance policy.

The event that triggers the coverage for “claim-made” reported or “occurrence” type. 

Some of the features of claim-made are - 

• It refers to the type of life insurance asset class that covers claims when it is active. If a client lets the policy lapse before reporting an incident, the insurer will not accept the claim.

It is the kind of policy that remains active when the client claims at the time when the policy is active.

If the client cancels the policy, the insurer will not accept any claim, even in the condition when the incident happens at the time when the policy was in effect. 

• Such policies are mostly taken by an organization like professional liability or director's insurance claims. Such policies do not cover on expiry and in case of extended reporting period or tail to avoid gaps. 

• The premiums for such a policy increase each year where it reflects the higher risks associated with the client’s profile. 

• It can be highly complex and it can be difficult for the claimant to get proper coverage due to the necessity for the notification procedures. In the condition of failure to report or provide notifications, the insurer can eliminate the cover.

• It provides affordable lifelong policies where the limit is fixed over the lifetime and one can claim for events that happened long ago. The policy terms can be extended by adding a retroactive date or nose coverage. 

• Most market business package policy for occurrence basis, and most employee benefits, professional liability, and employment insurance – are all based on a claim made triggers.

• In occurrence, a claim can arise many years after the policy has expired and in the case of claims made – first, the date is checked to notify the insurer to defend and settle.

The regulations that trigger such a policy are 

• The insured receives the notification of a claim or potential claim situation.

• The incident must be reported promptly during the policy period. Any negligent act or omission can lead to the creation of a retroactive date in the policy declarations.

• The insured should make a good faith statement where the professional and the firm certify that they do not know the mistake or error made on the date the policy was purchased. 

• Unless the carrier changed the form related to the policy, one will be notified at the time of renewal and the reporting requirement will remain the same.