Liability coverage triggered by when a claim is first made and reported.
Claims-made coverage is liability insurance that generally responds when a claim is first made against the insured, and often reported to the insurer, during the policy period, subject to the wording and any retroactive-date requirement.
This term matters because many readers assume the date of the underlying act alone controls coverage. In claims-made forms, the timing of the claim and the reporting rules can be just as important as the date the work was done.
In Canada, claims-made wording commonly appears in professional liability, errors and omissions, directors and officers, employment-practices, and cyber-style liability coverages. The insurer is often concerned with:
This differs from the usual occurrence basis logic found in many commercial general liability forms.
Because the coverage is timing-sensitive, readers usually need to understand the retroactive date, any prior acts coverage, and whether an extended reporting period is available if the policy ends.
| Timing question | Why it matters |
|---|---|
| When did the alleged act happen? | The answer may determine whether the claim falls before or after the retroactive date. |
| When was the claim first made? | Claims-made coverage typically requires the claim itself to arise during the relevant policy period. |
| When was the claim reported? | Late reporting can change the result even if the allegation otherwise looks insurable. |
| Was coverage renewed without gaps? | Gaps, carrier changes, or restarted retroactive dates can remove continuity. |
A consulting firm gave advice to a client last year. The client alleges negligence and sends a demand letter during the current policy term. Whether the professional-liability policy responds depends on the claims-made wording, the retroactive date, and whether the firm reported the claim properly.
The same file can look very different if the firm changed insurers recently, allowed the policy to lapse, or bought a new form with a later retroactive date. That is why claims-made coverage is best understood as a timing system rather than a simple promise to pay negligence claims.
Claims-made coverage is not the same as occurrence basis. In claims-made coverage, later timing and reporting rules remain central even when the underlying work was performed earlier.
It is also wrong to assume any current-year claim is covered automatically. If the alleged act falls before the retroactive date or the reporting rules are missed, the result can change sharply.
Readers also often assume the current policy year is the only relevant document. In practice, prior declarations, endorsements, and renewal continuity can matter just as much as the wording on the latest certificate.
Retroactive dates, notice requirements, extended reporting options, and renewals can all alter the practical result. A claims-made policy needs to be read as a timing system, not just as a generic liability promise.