Claims-Made Policy
A claims-made policy is triggered when a claim is first made against the insured during the policy period (or an extended reporting period), regardless of when the underlying act happened, subject to any retroactive date and the policy's reporting requirements.
Last updated October 13, 2026
How a claims-made policy works
Two things generally must line up. First, the claim must be made against the insured, and reported to the insurer, while the policy is in force or during an extended reporting period. Second, the underlying wrongful act must not pre-date the policy's retroactive date, if it has one. Professional liability, errors and omissions, D&O and employment practices policies are usually written this way.
The trigger is the claim, not the incident. When the policy is renewed continuously with the same insurer, the retroactive date generally stays fixed, so coverage for earlier acts builds up over time. If the policy is cancelled or not renewed, coverage for later claims typically ends unless tail coverage (an extended reporting period) is in place.
Claims-made forms exist because they let insurers price and close out a year of coverage sooner, since the exposure is tied to claims reported in that period rather than events that could surface years later.
Example
A hypothetical software firm delivers a project in 2024 and a client sues in 2026. If the firm holds a claims-made E&O policy in 2026, with a retroactive date before 2024, and reports the suit during that policy period, the policy may respond. If the firm cancelled coverage in 2025 without buying a tail, the 2026 claim would typically fall outside the policy.
What to watch for
- Reporting: a claim must usually be reported promptly, and some policies set a hard deadline. Late notice can jeopardize coverage.
- Retroactive date: switching insurers can reset it. Ask for prior acts coverage to be preserved when changing carriers.
- Circumstances: some policies let you report circumstances that could lead to a claim, locking coverage into the current policy.
- Transactions and wind-downs: acquisitions, shutdowns and non-renewals can end the policy, so plan the tail early.
- No fixed deadline: some claims-made forms only require reporting "as soon as practicable," while others set a hard cutoff, so read the notice provision.
Claims-made vs. occurrence and other related terms
- Claims-made vs. occurrence. An occurrence policy responds to injury or damage that happens during the policy period, even if the claim arrives years later. A claims-made policy responds to a claim first made during the policy period. The claim date, not the incident date, decides which policy applies.
- Claims-made vs. claims-made-and-reported. Some forms require only that the claim be made during the policy period, with reporting allowed within a stated window afterward. Others require the claim to be both made and reported during the policy period or a short window after it. The reporting wording matters, so read it closely.
- Retroactive date vs. inception date. The inception date is when this policy period starts. The retroactive date is the earliest date a wrongful act can occur and still be covered. It can be earlier than inception, and on a renewed policy it often is.
- Extended reporting period vs. prior acts coverage. An extended reporting period lengthens the time to report claims under an old policy after it ends. Prior acts coverage is a new insurer agreeing to cover earlier acts back to a stated retroactive date. They solve different problems.
- Policy period vs. reporting window. The policy period is the dates the policy is in force. The reporting window may be the same dates or slightly longer, depending on the wording.
Second example: changing insurers at renewal
A hypothetical fintech software company has carried claims-made errors and omissions coverage with the same insurer since 2022, with a retroactive date of January 1, 2022. At the 2026 renewal it moves to a new insurer. The new policy starts with a retroactive date equal to its inception unless the company negotiates otherwise. In 2027 a customer makes a claim about work delivered in 2024. The old policy has ended, and the new one may exclude the claim because the work pre-dates its retroactive date. If the company had asked the new insurer to carry over the 2022 retroactive date, or bought an extended reporting period on the old policy, the result could have been different. The exact outcome depends on the wording.
Questions to ask your broker or underwriter
- Is this form claims-made or claims-made-and-reported, and how long after expiration can I still report?
- What is the retroactive date, and will it carry over at renewal or when we change insurers?
- Can we report circumstances that could lead to a claim, and what does that lock in?
- If the policy ends, how long is the tail available, how long must we wait to elect it, and what does it cost?
- Does the extended reporting period come with new limits, or does it share the expiring limit?
- What happens to coverage if we are acquired, merge or wind down? See run-off.
- Do the limit and retention apply per claim or in the aggregate?
Why it matters for technology, AI, fintech and digital-asset companies
Tech E&O, cyber, D&O and EPL, the core lines for venture-backed companies, are mostly claims-made. Changing insurers at renewal, being acquired, or winding down can each affect which past work remains covered, so the retroactive date deserves review at every renewal.
AI products add a timing problem. A model or feature can be deployed in one year and drive a customer dispute or regulatory question much later, so a retroactive date that matches the date you first sold or deployed the product is worth confirming. Digital-asset and fintech companies face the same issue with regulatory inquiries that can arrive long after a launch. Most technology E&O, D&O, EPL and cyber policies are claims-made, so the same discipline applies across the program. See errors and omissions, directors and officers and cyber and technology E&O coverage.
Related terms
Frequently asked questions
What is a claims-made policy?
A claims-made policy is triggered when a claim is first made against the insured during the policy period (or an extended reporting period), regardless of when the underlying act happened, subject to any retroactive date and the policy's reporting requirements.
What is the difference between claims-made and occurrence?
An occurrence policy responds to injury or damage that happens during the policy period, whenever the claim is filed. A claims-made policy responds to claims first made and reported during the policy period, so timing of the claim, not the incident, decides which policy applies.
What is a retroactive date on a claims-made policy?
It is a cutoff that generally excludes claims arising from wrongful acts before that date. When a policy is renewed continuously, the date typically stays the same, so the window of covered past acts grows. Changing carriers can reset it unless prior acts coverage is negotiated.
What happens to a claims-made policy when it ends?
Coverage for new claims generally stops when the policy expires or is cancelled, even if the work was done while it was in force. An extended reporting period, often called tail coverage, can be added to keep reporting claims for a set time.
What does claims-made-and-reported mean?
It means the claim must be both made against the insured and reported to the insurer within the policy period or a short window after it. Some claims-made forms are looser and allow later reporting of claims made during the policy period. The wording of the reporting clause decides which applies.
Do I need tail coverage if I switch insurers?
Not always. If the new insurer agrees to a retroactive date that matches the old one, or provides prior acts coverage, past work may remain covered without a tail. If it does not, an extended reporting period on the old policy may be needed. Compare both options before the old policy ends.
Which types of insurance are usually claims-made?
Professional liability, errors and omissions, directors and officers, employment practices and many cyber policies are commonly written on a claims-made basis. General liability is usually written on an occurrence basis, although claims-made versions exist. Check the policy form.
What does it mean to report a circumstance under a claims-made policy?
Many claims-made policies let the insured notify the insurer of facts that could reasonably lead to a claim. If the notice meets the policy's requirements, a later claim from those facts may be treated as made during the policy in which the circumstance was reported. The notice conditions are specific, so follow the wording.
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