MONDAY, FEBRUARY 28, 2022
While the difference between a claims made and a claims made and reported insurance policy may seem subtle, it’s crucial to understand the difference between these two policy types so you can choose the policy that may best work for your situation. In general, claims made and claims made and reported policies are professional liability policies that may include policies for:
What Is a Claim?
A claim is your official notice to your or your business (the insured party) that an incident has occurred that may trigger your professional liability protection. Even if someone tells you informally, either in person or via email, that an incident has taken place, that action may constitute a claim.
Many people believe that a claim has not occurred until a person or business has received notice that they are being sued, but that is not the case.
Claims Made and Reported Coverage
Claims made and reported policies require that claims are made and reported within a single policy period as a condition of receiving coverage. While this type of policy may be less expensive than a claims made policy, it typically also has more restrictions regarding the amount of protection it provides. 
Claims Made Coverage
Claims made coverage may provide protection from losses for claims made during the policy period. It may also provide coverage if you don’t report the claim during the coverage period.
In general, claims made coverage provides more flexible reporting requirements than a claims made and reported policy. A claims made policy may pay for claims resulting from an incident that happened during the period of coverage, even if it was not reported until after the coverage period ended.
Timing of Reporting Claims
The difference between a claims made and reported policy and a claims made policy is the timing of reporting claims to the insurer.
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Claims Made and Reported Coverage: Requires the insured party to report the claim “as soon as practicable” or promptly upon becoming aware of a potentially insurable incident.
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Claims Made Coverage: Claims made must be reported within the same policy period to potentially receive coverage.
How to Choose the Right Type of Insurance for Your Business
Both claims made and claims made and reporting coverage are useful, depending on your situation, budget, and needs. At U.S. E&O Brokers in Houston, TX, we specialize in helping our clients understand their options. Get the business insurance you need by contacting one of our brokers, today.
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