A policy form which will respond to claims based on when the claim is reported. An extended reporting period can be purchased (and in most cases is a free coverage) that extends the time after the policy has ended in which claims can still be reported.
The claim itself must have occurred between the retroactive date (the first date that a claims-made policy is purchase, listed on the declarations page) and the final date of the policy. However, it can still be reported to the insurance company even after the policy has been cancelled and still be covered, as long as arrangements for an extended reporting period (tail coverage) have been made. In many instances, tail coverage is free. In other cases, it can be purchased.
Consent to Settle
An insurance policy clause that requires the named insured’s permission in order to settle a claim.
The portion of premium that corresponds with the exact amount of coverage that has already been afforded.
Extended Reporting Period
On a claims-made policy form, the period following the cancellation date during which a claim can still be reported. Also known as “tail coverage”.
The individual or business entity named in the Declarations page for whom coverage is afforded.
A policy form that will respond to a claim based on when it occurred. The policy that was in force at the time the damages occurred will be the policy that responds to the claim.
There are two ways to write Professional liability policies: claims-made or occurrence. The difference between the two revolves around 2 dates: the date the claim actually occurred, and the date that it was subsequently reported to the insurance company. When professional services are rendered, it may take several years for a client or patient to realize their damages and decide to place a claim.
Prior Acts Coverage
On a claims-made form, coverage that extends back to the original retroactive date. If an insured switches insurance companies while they are still in practice, the new company should offer full prior acts coverage, meaning that they will assume the responsibility of covering all claims reaching back to the original retroactive date of the original company.
The first inception date of a claims-made policy.
On a claims-made policy form, the period following the cancellation date during which a claim can still be reported. Also known as the extended reporting period.
Liability that you assume for the actions of someone else.