Claims-Made Liability Coverage

Claims-made liability coverage is coverage which is triggered by the date the doctor or medical professional is aware the claim exists and notifies the insurer. Notification must be in writing and reported to the carrier by the insured. This type of insurance differs from occurrence coverage. Under occurrence coverage the policy in force on the date of the event causing the loss must pay for the loss or settlement expenses.

Claims-made liability coverage is the most popular form of coverage for doctors, accountants, board directors, real estate agents and insurance brokers. The one complaint made against claims-made liability insurance is its complexity, although this can be remedied by retaining a competent broker with experience in claims-made issues.

Before purchasing insurance, cost should be evaluated. Occurrence policies are more expensive than comparable claims-made policies because they provide insurance coverage for claims that occurred during the policy year, regardless of when the claim is reported. The cost for a claims-made liability policy will also be less expensive the first year because the policy will only cover claims which happen the first year and which are reported that year. After that, the premiums for claims-made liability insurance will increase until the policy matures for 5 to 7 years. Then finally, the cost will stabilize.