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Claims-Made Policy

What Is a Claims-Made Policy?

A claims-made policy is an insurance structure requiring claims to be reported during a specific period.

These policies have three important date ranges you’ll need to know:

  • Effective Date: this is the period from when the policy goes into effect to when it expires, typically a year
  • Retroactive Date: this can pre-date the effective date, extending the coverage term to before the policy went into effect
  • Extended Reporting Period: after a claims-made policy has expired or been canceled, you can still make claims during this period as long as the event occurred during the coverage period (typically 60 days after expiration)

Here’s an example to illustrate how this works:

Retroactive Date Effective Date Extended Reporting Period
01/01/2020 to 01/01/2024
01/01/2023 to 01/01/2024
01/01/2024 to 03/01/2024
Claims made definition.

Claims-Made Policy vs. Occurrence Policy

There are two main differences between an occurrence policy and a claims-made policy: the time restrictions for reporting and when incidents occur.

If you have an occurrence policy, you can report a claim during the policy period or after the expiration date, as long as the incident occurred during your coverage period.

(Note: It’s always best to report a claim as soon as you know about it.)

A claims-made insurance policy only allows you to report a claim during the policy period or the extended reporting period. The incident must have occurred during your coverage period (which can go back as far as the retroactive date up to the expiration date). 

Pros and Cons of a Claims-Made Policy

The occurrence policy is more liberal when it comes to reporting an incident. 

You can submit a claim after the policy has expired—even several years later—as long as the incident occurred while the policy was in force. However, an occurrence policy does not have a retroactive date to cover claims before the effective date.

On the other hand, a claims-made policy is more strict about when you can report. 

The incident must occur during the coverage period (which can extend to the retroactive date), and claims must be made during the policy period or the extended reporting period. Claims reported after these times won’t be covered.

One key benefit of claims-made insurance is the option to add a Supplemental Extended Reporting Period (SERP) to your policy. While the standard ERP is usually 60 days at no extra cost, you can opt to extend the reporting period by one, two, or three years for an additional premium.

Does FLIP Offer a Claims-Made Policy?

FLIP’s basic general liability insurance is an occurrence-based policy, but our liquor liability coverage is claims-made.

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