Claims-Made Policy
A policy that covers claims first made during the policy period, regardless of when the alleged error occurred, subject to the retroactive date.
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 omission actually occurred, subject to the retroactive date. This is the standard coverage trigger for professional liability, D&O, EPLI, and cyber insurance policies.
The claims-made trigger creates a direct connection between the policy in force when the claim is reported and the obligation to respond. If a professional makes an error in 2022 but the client does not discover and report the claim until 2025, the 2025 policy responds (assuming the retroactive date goes back to at least 2022). The 2022 policy has no obligation because no claim was made during its policy period.
Claims-made policies involve several critical dates: the policy inception date, the retroactive date (claims arising from acts before this date are excluded), and the policy expiration date. Understanding these dates is essential because gaps in coverage, either through policy lapses or advancing retroactive dates, can leave entire periods of professional activity uninsured.
Why It Matters for Brokers
Claims-made coverage requires careful management by brokers. Unlike occurrence policies that cover events during the policy period regardless of when claims are filed, claims-made policies require continuous, uninterrupted coverage to maintain protection. A lapse in coverage, a change in carriers that advances the retroactive date, or failure to purchase tail coverage when the policy is terminated can all create devastating coverage gaps. As the scope of protected classes continues to expand under federal and state law, EPLI policies must be reviewed regularly to confirm that discrimination coverage includes all current categories, including emerging areas like gender identity and genetic information. Wrongful termination claims are frequently the highest-severity EPLI claims, often resulting in six-figure settlements, so brokers should ensure EPLI limits are adequate to cover both defense costs and potential awards for these claims. Third-party EPLI coverage fills an important gap because the CGL policy's personal and advertising injury coverage does not typically respond to employment-related discrimination or harassment claims brought by customers, vendors, or other non-employees.
Real-World Example
An architect has maintained continuous claims-made professional liability since 2018 with a retroactive date of 01/01/2018. In 2025, a client discovers a design defect in a building designed in 2020. The 2025 policy responds because: (1) the claim is first made in 2025 (during the policy period), and (2) the error occurred in 2020, which is after the 2018 retroactive date. If the architect had let the policy lapse in 2023 and renewed in 2024 with a new retroactive date of 01/01/2024, the 2020 design error would not be covered, it occurred before the new retroactive date.
Common Mistakes
- 1Allowing a claims-made policy to lapse and then renewing with a new retroactive date that does not match the original, creating a gap in prior acts coverage.
- 2Switching carriers and accepting a new retroactive date that is later than the prior policy's retroactive date, excluding coverage for years of professional activity.
- 3Not purchasing tail coverage (extended reporting period) when discontinuing a claims-made policy, leaving all prior acts permanently uninsured.
How brokerageaudit.com Handles This
brokerageaudit.com's Policy Checker tracks retroactive dates on all claims-made policies and alerts brokers when a renewal or carrier change would advance the retroactive date. The system flags claims-made policies approaching expiration without renewal or tail coverage in place, preventing lapses. The platform maintains a retroactive date history for each account to ensure continuous prior acts protection.