California Property & Casualty Broker-AgentCasualty InsuranceHard
A California client is comparing a 'claims-made' Professional Liability policy with an 'occurrence' Commercial General Liability (CGL) policy. Which key difference primarily determines when coverage is triggered for a claim under the claims-made policy?
- AThe date the injury or damage occurred.
- BThe date the claim is first reported to the insurer.
- CThe date the lawsuit was filed against the insured.
- DThe date the policy was first issued.
Show answer & explanationAnswer & explanation
Correct answer: B. The date the claim is first reported to the insurer.
A claims-made policy is triggered when a claim is first made against the insured and reported to the insurer during the policy period or an extended reporting period. This is distinct from an occurrence policy, which is triggered by the date the injury or damage occurred.
Why the other options are wrong
- A. This describes the trigger for an occurrence policy, not a claims-made policy.
- C. The filing of a lawsuit is an event that might prompt a claim, but the policy trigger is the reporting of the claim to the insurer.
- D. While the retroactive date is related to policy issuance, it's not the primary trigger for a claim itself.
Claims-Made Trigger
A claims-made policy's coverage is triggered when a claim for a covered act is first made against the insured and reported to the insurer during the policy period or an extended reporting period.
- Crucial concept for Professional Liability and D&O policies.
- Requires claim to be 'made and reported' within policy term.
- Often includes a 'retroactive date' to limit coverage for past acts.
Memory trick: Claims-Made: The claim must be 'made' and 'reported' to get paid.