More often than not (and some would argue rightfully so) my peers and I focus on explaining the difference between an occurrence and a claims-made policy due to how the coverage triggers drastically affect whether coverage is afforded or not; exhibit A: Claims-Made vs. Occurrence Coverage Triggers
While the difference between claims-made and occurrence gets all the attention, there is a deviation of the claims-made coverage trigger that is often overlooked, and that is the claims made and reported coverage trigger. As I have previously pointed out, claims-made policies cover claims that either occurred in the past or during the current policy period, so long as the claim is made during the current policy period. It is important to note the determination of coverage is triggered by the date the policyholder first becomes aware and notifies the insurance company of a claim or potential claim. The insurance policy in force on the date the policyholder becomes aware and gives notice to the insurance company is the policy which will respond with defense and settlement. The benefit of a claims made policy is that the insured only has to report the claims “as soon as practicable,” or just promptly without any specific deadline.
The claims-made and reported policy requires that the claim must be both made against the insured and reported to the insurer during the policy period for coverage to apply. Claims-made and reported policies are less lenient than a pure claims-made policy due to the window in which the claim must be reported to the insurer. Below is sample wording from a claims-made and reported policy in regard to notification:
The Insureds shall, as a condition precedent to their rights to payment under this Coverage Section only, give the insurer written notice of any Claim made against the Insureds as soon as practicable, but in no event later than 60 days after such Claim is first made against the Insureds, or the expiration of the Policy Period, whichever is later.
In the event the policyholder is made aware of a claim but does not report it to their insurance carrier within the specified period of time, the insurance carrier is relieved of its obligation to defend the policyholder.
While the difference between a claims-made and claims made and reported is self-explanatory, the ability to determine which coverage trigger your current policies contain is not as simple. Like all insurance, the devil is in the details. It is common for professional/executive liability policies to use claims-made language generically whether it is claims-made or claims-made and reported. Many policies declare they are claims-made, when in reality they are actually claims-made and reported. Some policy forms incorporate either bold wording on the declaration page, or a statement within the insuring agreement proclaiming the policy is a claims-made and reported policy.
However, even if the wording is absent, do not assume that policy is a claims-made policy, as there is wording embedded in the policy under 'notice of claim provision' that stipulates the policyholder's obligations in the event of a claim. If ever in doubt, consult with your trusted insurance professional to ensure you understand the terms of your insurance policy.