What does 'claims-made' coverage mean?

'Claims-made' coverage refers specifically to a type of insurance policy that provides coverage for claims that are made during the policy period, regardless of when the incident that led to the claim occurred. This means that if a claim is reported within the duration of the policy, it is covered, as long as the incident happened after the retroactive date specified in the policy.

This type of coverage is particularly common in professional liability and errors and omissions insurance, where the timing of the claim is crucial. It ensures that a business is protected for claims that may arise from incidents that happened earlier, but the claim itself must be made while the policy is active.

In contrast, other options describe scenarios that do not align with the standard definition of 'claims-made' coverage. For example, coverage being limited to incidents occurring during the policy period does not acknowledge the timeline of claims, which is central to the definition of 'claims-made.' Additionally, unlimited coverage or coverage for incidents reported after the policy period ends do not accurately reflect the restrictions and coverage terms that are characteristic of a 'claims-made' policy.