The Benefits of Claims-Made Insurance PoliciesJul 22 2022
Claims-made coverage is one of the most common insurance policies for professionals. If you’d like to learn more about this type of coverage, we’ve got you covered with the key things you need to know and the benefits of claims-made insurance policies.
What Is a Claims-Made Insurance Policy?
What do people need to know about a claims-made insurance policy? Claims-made coverage is a form of professional liability insurance from a malpractice insurance agency. Many professions require professional liability insurance, but it’s especially common for medical professionals.
Essentially, a claims-made policy covers the insured only when the coverage is active. So, if you have a claims-made policy for three years, you’re protected for as long as that policy is in effect—if it expires, you’ll need to get a new policy to stay covered.
How Is Claims-Made Different From Occurrence-Based Coverage?
Under professional liability coverage, applicants can choose between claims-made or occurrence-based coverage, but what’s the difference? The significant difference is that claims-made policies are more restricted, while occurrence-based policies will always cover the insured even after the policy lapses.
For instance, if you had an occurrence-based policy for two years, you would always be insured for those two years even if the policy expires. A claim could be filed ten years later, but if it falls within that period where you had occurrence-based coverage, you’ll still be covered.
A claims-made policy only covers you if the procedure is still active. If you let your policy expire, you won’t be covered for the time you were insured—you’ll need additional or retroactive coverage.
What Are the Benefits of a Claims-Made Insurance Policy?
Claims-made policies are especially prevalent in the healthcare industry. Why do medical professionals choose claims-made insurance—what are the benefits?
The most straightforward answer is typically the correct one, and in this case, most choose claims-made policies because they’re more affordable. A claims-made policy may not offer the continued coverage of an occurrence-based policy, but it makes up for it by providing lower initial premiums.
The lower premiums benefit individuals and facilities purchasing coverage for their staff in a group policy. The initial lower premiums free up cash flow for businesses and individuals.
Add Extended Coverage
There are ways to add extended coverage to a claims-based policy through retroactive and tail coverage. Retroactive coverage means that your policy also covers claims made before the coverage went into effect, so there are no gaps in coverage.
Tail coverage goes the other way, covering you after your policy is expired. Tail coverage is often utilized as a stopgap between an old insurance carrier and a new one to ensure the individual is always protected.
Those are the basics and benefits of claims-made insurance policies, but there is much more to know if you’re interested in purchasing coverage. If you’d like to learn more, consult the experts at Baxter & Associates, who can help you get the insurance policy that best fits your needs.