When a claim is filed against a claims-made insurance policy, it provides coverage regardless of when the claim event occurred. A claims-made policy is a popular choice when there is a significant delay between events occurring and when claimants file claims. The policy only applies to claims made while the policy is active. Many businesses have claims-made policies or occurrence policies, which extend coverage to claims made on inactive policies based on events that occurred while the policies were active. This is in contrast to occurrence-based insurance, which provides coverage for incidents that occur during the policy period, regardless of when the claim is made. Claims-made policies often include a retroactive date that specifies the earliest date for which incidents can be covered, and may also require the policyholder to purchase extended reporting coverage (also known as "tail coverage") to continue protection after the policy expires.
What Are The Advantages Of Claims-Made Insurance?
There are several advantages of claims-made insurance:
Lower initial premiums: Claims-made policies typically have lower initial premiums than occurrence-based policies.
Tailored coverage: Claims-made policies can be tailored to the policyholder's specific needs, including the type and amount of coverage and the retroactive date.
Claims management: Claims-made policies often have a more proactive approach to claims management, with the insurer closely involved in handling claims and providing support to the policyholder.
Consistent coverage: Claims-made policies provide constant coverage for claims made during the policy period, even if the alleged incident occurred in the past.
Simplified coverage: Claims-made policies simplify the buying process by providing coverage for a specific period rather than requiring ongoing analysis of past policies to ensure that coverage is still in effect.
What Are The Disadvantages Of Claims-Made Insurance?
Fixed coverage limits. If you use your policy, you may not have enough coverage for future claims.
More complicated than occurrence policies. When switching to a new insurer, special precautions must be taken such as claim process, selecting the right insurance coverage and Insurance renewals.
Know More About Claims-made Insurance With SelectFirst Insurance.
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