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Claims-Made Policy: A Comprehensive Guide to Insurance Coverage
Definition & Meaning
A claims-made policy is a type of insurance that provides coverage for claims made during the policy period. This means that the insurer agrees to cover claims only if they are reported while the policy is active or within a specified time after the policy ends. Notably, this policy does not cover incidents that occurred outside this timeframe, unless the insured has purchased an extension for reporting claims. This type of policy is also referred to as a discovery policy.
Table of content
Legal Use & context
Claims-made policies are commonly used in various fields, including medical malpractice and professional liability insurance. In legal practice, these policies are crucial for professionals who want to protect themselves against claims arising from their services. Users can manage claims-made policies through legal forms and templates, such as those offered by US Legal Forms, which can help simplify the process of obtaining and understanding insurance coverage.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
(Hypothetical example) A doctor holds a claims-made policy that covers them for any malpractice claims made during the policy year. If a patient files a claim for an incident that happened six months ago, the doctor is covered as long as the claim is reported while the policy is active. If the policy expires and the doctor did not purchase an extension, they would not be covered for any claims made after the expiration date.
State-by-state differences
Examples of state differences (not exhaustive):
State
Key Differences
California
Claims-made policies often require specific language regarding extended reporting periods.
Florida
Insurers must provide clear disclosure of coverage limits and exclusions.
New York
Claims-made policies may have different requirements for renewal and reporting.
This is not a complete list. State laws vary and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Occurrence Policy
Covers claims for incidents that occur during the policy period, regardless of when the claim is made.
Claims can be made anytime after the incident, unlike claims-made policies.
Claims-Made and Reported Policy
Requires claims to be made and reported during the policy period.
Stricter than claims-made policies, as both conditions must be met for coverage.
Common misunderstandings
What to do if this term applies to you
If you are considering a claims-made policy, it is essential to understand the terms and conditions thoroughly. Review your coverage options and consider purchasing an extended reporting period if you anticipate potential claims after your policy expires. You can explore US Legal Forms for ready-to-use templates that can assist you in managing your insurance needs. If your situation is complex, consulting with a legal professional may be necessary to ensure adequate coverage.
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Commonly used in professional liability and malpractice insurance.
Key takeaways
Frequently asked questions
The main advantage is that it provides coverage for claims made during the policy period, which can help manage risk for professionals.
Yes, but it may require a new application and underwriting process, and you should discuss this with your insurance provider.
If you donât purchase an extended reporting period, you will not be covered for claims made after your policy expires, even for incidents that occurred while the policy was active.