Claims-made policy
A claims-made policy is liability insurance that covers a qualifying claim when it is first made, and often reported, during the policy period or an extended reporting period. It covers earlier acts only if they happened on or after the policy's retroactive date. If coverage ends, you may need tail coverage for claims reported later.
Also called: claims-made form, extended reporting period, tail coverage, prior acts coverage, retroactive date
With a claims-made policy, the date that matters most is when someone makes a claim against you, not when the mistake or injury happened. Two other dates decide the rest: the retroactive date, which sets how far back covered acts can reach, and the end of any extended reporting period, which sets how long after the policy ends a claim can still come in. If you are cancelling, retiring, switching insurers or comparing a quote against an occurrence policy, those dates are the decision.
How a claims-made policy pays a later claim
Take an illustrative policy with a $1,000,000 per-claim limit, a $10,000 deductible and a retroactive date of January 1, 2024. An alleged professional error happens in 2024, and the client makes and reports the claim in 2026, while the 2026 policy is in force. The claim settles for $750,000.
Hover or tap a row to highlight it.
| Item | Amount |
|---|---|
| Per-claim limit | $1,000,000 |
| Covered settlement | $750,000 |
| Deductible you pay | $10,000 |
| Insurer pays ($750,000 minus $10,000) | $740,000 |
| Limit left for this claim ($1,000,000 minus $750,000) | $250,000 |
The 2026 policy responds because the act happened after the retroactive date and the claim was made during the policy period. If the same claim had first been made after the policy and any extended reporting period ended, the policy might not respond, even though the error happened while it was active. The real outcome depends on the reporting language, retroactive date, exclusions, limits, defense-cost terms and deductible. These dates and amounts are illustrations, not averages.
Retroactive dates, tail periods and other choices
Several parts of a claims-made policy can be set differently, and each one moves the edge of your coverage.
- Retroactive date. A date matching the policy's start date leaves earlier acts outside the policy. An earlier retroactive date provides prior-acts coverage.
- Prior-acts, or "nose," coverage. This covers injury or damage on or after the retroactive date and before the current policy started, as defined in New York's OGC Opinion No. 07-04-14 (opens in a new tab).
- Extended reporting period, or tail. This lets qualifying claims first made after the policy ends count as made during the policy period. Defined periods such as six months, one year and five years appear alongside indefinite periods, according to NAIC Issue Paper No. 65 (opens in a new tab).
- Defense costs inside or outside the limit. If legal costs sit inside the limit, every dollar spent on defense reduces what is left for a settlement or judgment.
- Claims-made-and-reported wording. Some policies require the claim to be both made and reported within the policy period or a stated reporting window.
- Limits and deductibles. A higher limit raises the most available for a covered claim, and a higher deductible raises your share; the premium effect comes from the insurer's filed rating plan.
Where you see claims-made wording
Claims-made forms are most common in business and professional liability: medical malpractice, lawyers' professional liability, directors and officers, employment practices liability, errors and omissions and some specialized commercial liability policies. Our comparison of general liability vs professional liability insurance shows where each kind of coverage fits. Claims-made is generally not the structure of personal auto, homeowners, renters, life, health or pet policies.
You'll meet the term on a quote or application, often next to "occurrence," and on the declarations page, which lists the coverage form, limits, retroactive date, deductible and policy period. The insuring agreement states when a claim is covered, and the conditions set notice deadlines. An endorsement may add prior-acts coverage or a tail, and a claim letter may cite the term when a claim falls outside the policy period.
Connecticut and New York claims-made rules
Connecticut sets minimum terms for claims-made professional liability policies. Under Conn. Gen. Stat. § 38a-394 (opens in a new tab), each such policy must include a provision for buying prior-acts coverage and a right to buy, during the policy period and no later than 30 days after it ends, equivalent coverage for claims from an insured period whenever they are made. The same section gives certain medical malpractice insureds, those age 60 or older or insured continuously for five years, unlimited extended reporting coverage at no extra charge if the insurer voluntarily withdraws the policy from the state. Conn. Gen. Stat. § 38a-327 (opens in a new tab) directs the Insurance Commissioner to set standards for claims-made policies.
New York's Regulation 121, 11 NYCRR Part 73, sets minimum standards for claims-made policies other than those for physicians and surgeons. When coverage terminates, it requires a 60-day automatic extended reporting period, according to the New York Department of Financial Services (opens in a new tab), and "termination" includes cancellation, nonrenewal, lower limits, a higher deductible, a new exclusion or another less favorable change. Renewal also does not allow a late claim under a prior period once its reporting period has ended, according to DFS Circular Letter No. 26 (opens in a new tab).
Questions to ask an agent or insurer
- What is the retroactive date, and are acts before it covered? That date decides whether earlier work or incidents fall within the current policy.
- Must a claim be both made and reported during the policy period? Reporting after the policy expires can affect coverage.
- What tail options are available, for how long and at what charge? A tail addresses claims first made after cancellation, nonrenewal, retirement or a switch.
- Are defense costs inside or outside the limit? Inside the limit, legal expenses shrink the money left for a settlement.
- What happens to my prior coverage if I change insurers or move to an occurrence policy? A switch can leave incidents from the old period without coverage if they are reported later.
Frequently asked questions
Common questions at renewal and when coverage ends.
What is the difference between claims-made and occurrence coverage?
Claims-made coverage follows the date the claim is made. Occurrence coverage applies to losses that happen during the policy period regardless of when the claim is made, according to the NAIC (opens in a new tab).
Does renewing my policy cover every earlier incident?
No. Whether an earlier incident is covered depends on the current policy's retroactive date, exclusions, reporting rules, limits and any prior coverage.
What happens if my claims-made policy lapses?
A claim reported later about an incident from the old policy period may fall outside coverage. An extended reporting period, a prior-acts arrangement or a replacement policy that addresses that exposure can close the gap, so line one up before the policy ends.
Are claims-made general liability forms used in New York?
Not for general application. New York disapproved claims-made commercial general liability forms for general use because they can create coverage gaps, according to the New York Department of Financial Services (opens in a new tab).