What is "claims-made" coverage and why does it matter?

Most professional liability policies are written on a claims-made basis. That means the policy covers claims that are first reported during the active policy period, regardless of when the underlying incident occurred (provided it was after the policy's retroactive date). Translation: you have to keep continuous coverage for as long as you might be sued. Lapsing, switching to a carrier that won't honor your retroactive date, or retiring without buying tail coverage all create exposure to claims for past work. Occurrence policies (used in some healthcare niches) work differently — they cover any incident that happened during the policy period, whenever the claim is later filed. We'll walk through which type fits your specialty and risk profile before we place coverage.