Washington State Insurance Practice Exam

How does claims-made insurance differ from occurrence insurance?

1. Claims-made insurance covers all past claims

2. Occurrence insurance only covers future claims

3. Claims-made covers claims made during the policy period

4. Occurrence insurance covers only specific types of claims

The correct answer is: Claims-made covers claims made during the policy period

Claims-made insurance is designed to provide coverage for claims that are made during the active policy period, regardless of when the incident that led to the claim occurred. This means that the policy needs to be in force when a claim is filed for it to be covered, which emphasizes the importance of maintaining continuous coverage. If a claim arises after the policy has expired, it will not be covered by claims-made insurance unless there is an extended reporting period or a tail coverage option. In contrast, occurrence insurance covers incidents that happen during the policy period, irrespective of when the claim is reported. This means that as long as the event occurred while the policy was active, the claim can be reported and will be covered even if it is filed after the policy has expired. This distinction makes claims-made insurance particularly relevant in fields such as professional liability, where claims may be initiated long after the professional services were rendered, thus emphasizing the need for coverage when a claim is made rather than when the event occurred.