Claims-Made
A coverage trigger where the policy in effect when the claim is first reported responds, rather than the policy in effect when the injury occurred.
What It Is
A claims-made policy covers claims that are first made (reported) during the policy period, regardless of when the underlying act, error, or event actually occurred — provided it occurred after the policy's retroactive date. This is the opposite of occurrence coverage, where the date of injury or damage determines which policy responds.
The retroactive date is a critical element of claims-made policies. It establishes the earliest date from which covered acts are eligible for coverage. If the retroactive date is the policy inception date, there is no prior acts coverage. If the retroactive date is set to a prior date (or is unlimited), the policy covers claims arising from acts that occurred before the current policy period.
Claims-made coverage is standard for professional liability, directors and officers, employment practices, and cyber policies. It is less common for CGL but is sometimes used for specific risk classes such as environmental or pharmaceutical exposures.
Why It Matters for Brokers
Brokers must pay careful attention to retroactive dates when placing or renewing claims-made policies. If a client switches carriers and the new carrier sets a retroactive date equal to the new policy's inception date, all prior acts coverage is lost. The broker must either negotiate a full prior acts retroactive date or purchase an extended reporting period (tail) from the expiring carrier. Failure to manage the retroactive date is one of the most common — and most expensive — E&O exposures for brokers.
Real-World Example
An environmental consulting firm carries a claims-made CGL policy with a retroactive date of January 1, 2020, and a current policy period of January 1, 2025 to January 1, 2026. In June 2025, a client sues alleging that a site assessment performed in March 2022 was negligent, causing $450,000 in remediation costs. Because the claim was made during the 2025 policy period and the alleged act occurred after the January 1, 2020 retroactive date, the current policy responds to the claim.
Common Mistakes
- 1Moving a client to a new claims-made carrier without negotiating a full prior acts retroactive date, creating a gap in coverage for prior acts.
- 2Not purchasing an extended reporting period (tail) when canceling or non-renewing a claims-made policy, leaving the client exposed to claims arising from past acts.
- 3Confusing the retroactive date with the policy inception date — they serve different purposes and may be different dates.
How brokerageaudit.com Handles This
Policy Checker extracts the retroactive date from every claims-made policy and flags it as a critical data point in the policy summary. It alerts the broker when a renewal or replacement policy has a retroactive date that is later than the expiring policy's retroactive date. COI Manager displays the claims-made trigger and retroactive date on certificates to ensure accuracy.