Claims Made Basis Liability Coverage
What Does Claims Made Basis Liability Coverage Mean?
Claims-made basis liability coverage refers to liability insurance that only covers claims filed during the active policy period. In other words, even if the event that caused the claim occurred during the policy period, it will only be covered if the claim is submitted while the policy is still in effect. Any claims filed after the policy period ends are not covered. Claims-made basis is most often used in professional liability insurance and other specialty policies where claims can arrive long after the work that triggered them.
Insuranceopedia Explains Claims Made Basis Liability Coverage
Claims-made basis liability coverage is an alternative to occurrence-based liability coverage. With occurrence-based coverage, the key factor is that the event causing the claim occurred during the coverage period; in such cases, the insurance company will pay out any valid claims, even if they are filed after the policy period ends. Occurrence-based coverage is the default format for most general liability insurance policies sold to small businesses. However, with claims-made basis liability coverage, any claim filed after the coverage period is not eligible for benefits. Policyholders with this type of coverage must ensure that they file claims promptly, as delays could result in the loss of benefits once the policy expires.
