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How Does It Work? - Claims-Made Coverage

“Claims-Made Coverage” – How Does It Work Again?

Almost all fiduciary professional liability policies are “claims made” policies. There are other types of policies called “occurrence policies,” more typically in the general liability context – i.e. bodily injury and property damage, but these are very rare in the fiduciary professional liability world, so we will not discuss them further here (please contact a presenter to discuss them further).

In the claims made context, the insurance policy will typically say (in the first paragraph or so) that it provides coverage for a “Claim” (a defined term) first made during the policy period - and, in most instances, reported during the policy period too. So it is the making of a “Claim” that “triggers” the coverage available under the policy.

Many policies define Claim as “a demand received for money or services.” Some people do not realize that a Claim therefore does not have to be a lawsuit. A letter or email from a client accusing you of making a mistake and seeking to hold you responsible can be deemed a Claim. Even a verbal demand can qualify.