A physician in California is purchasing a Claims-Made Professional Liability policy. The policy period is from January 1, 2023, to January 1, 2024, with a retroactive date of January 1, 2018. A patient files a lawsuit against the physician on March 1, 2024, for alleged medical malpractice that occurred on December 15, 2022. Assuming no tail coverage was purchased, will this claim be covered?
- AYes, because the incident occurred after the retroactive date.
- BNo, because the incident occurred before the policy period began.
- CYes, because the incident occurred within the policy period.
- DNo, because the claim was made after the policy period ended.
Show answer & explanationAnswer & explanation
Correct answer: D. No, because the claim was made after the policy period ended.
A Claims-Made policy covers claims that are 'made' (reported to the insurer) during the policy period, provided the incident occurred on or after the retroactive date. In this scenario, the incident occurred on December 15, 2022 (after the retroactive date of Jan 1, 2018), which is acceptable. However, the claim was 'made' on March 1, 2024, which is after the policy period ended (Jan 1, 2024). Without an extended reporting period (tail coverage), the claim will not be covered.
Why the other options are wrong
- A. While the incident did occur after the retroactive date, this is only one of two conditions for coverage under a claims-made policy; the claim must also be made during the policy period.
- B. The incident occurred before the policy period but after the retroactive date, which would be covered if the claim was made during the policy period. The issue here is when the claim was MADE.
- C. The incident occurred before the policy period began (Dec 15, 2022 vs. Jan 1, 2023), but it was after the retroactive date. However, the claim was made AFTER the policy period, which is the critical factor.
Claims-Made Policy (Professional Liability)
A type of liability insurance policy that covers claims reported to the insurer during the policy period, provided the incident causing the claim occurred on or after the specified retroactive date.
- Coverage is triggered by when the claim is MADE, not when the incident OCCURRED.
- Requires a retroactive date to limit coverage for past acts.
- Often necessitates 'tail coverage' (extended reporting period) when a policy is terminated or non-renewed.
Memory trick: Claims-Made: The claim must be 'made' within the policy dates, after the retro date!