Frequently Asked Questions

What Else Do I Need to Know About Claims Made Policies?

In a claims made policy, the limits that apply to a claim are the limits that are in place at the time the claim is made not at the time the services were rendered.

An insured who has switched from one claims made insurer to another must be able to determine which company is responsible for a claim. Claims made polices come in two forms, "incident" or "demand" reporting. In the better form, incident reporting, a claims made insurer is responsible for any incident reported to it during the time that its insurance is in force, even if it does not ripen into a claim until after the policy is cancelled. In this policy form, if an insured has a bad outcome and reports it to the insurer, the company is responsible for any claim that is ultimately made on that incident. In the demand reporting form, the company does not accept as its responsibility anything but claims made during the policy term. A bad outcome is not its responsibility unless it ripens into a claim during its policy term. This inferior product can significantly affect an insured's ability to change from one insurer to another if there has been a bad outcome that may lead to a claim because insurance companies are not likely to provide coverage to an applicant if they must also pick up a potential lawsuit as part of the package. In this setting the insured is almost always forced to purchase an expensive "tail" endorsement before switching insurers or to stay with the current insurer until a claim is made.

(For more on incident and demand triggers, see our blog entry "Medical Malpractice Insurance Demand and Incident Claims Triggers" on our blog www.MedMalInsuranceBlog.com)

As with any overview, this insurance information is general and intended to help you make informed decisions. The actual policies available in your state may contain features not discussed above. An insurance policy is a contract between you and an insurance company. You should read and understand any policy that you purchase. If you have any questions, have the company or insurance broker or agent take as much time as you need to explain policy terms to your satisfaction.

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