Claims-made insurance is based on the date of the claim, not the date when you performed the service. It covers professional liability claims reported while your policy is in force, as long as the claim involves a service you provided after your initial date (or retroactive date) of coverage. The limits you select at the beginning of each policy term apply only to the claims reported during that policy term.

Typically claims are reported five years or more after the date of service. The medical liability insurance industry calls this delay before 100% of claims reported the “long tail”

Under the claims-made insurance policy coverage for claims resulting from performance of a professional service forms a “stair-step” pattern based on this “long tail.”

The Stair Step Coverage Pattern

The first year, you are covered for claims that are reported for services performed during that year.

Because most claims will not be reported until after your first year of coverage, your claims-made premium rates will be proportionately lower for the first four years than those charged under occurrence policies.

If the time arises when you need to discontinue your claim-made coverage, you can purchase an extended reporting endorsement (commonly referred to as “tail” coverage) to protect you against future claims. The reporting endorsement will protect you against any claims that arise from a medical incident that occurred while your policy was in force, but have not yet been reported.