How the Timing Actually Works

Unlike an occurrence-based policy, which covers incidents that happen during the policy period no matter when the claim is filed, a claims-made policy only responds if the claim is made during the current policy term (or a qualifying tail period), and the underlying act must have occurred on or after the policy's retroactive date. That means both the act and the claim have to line up correctly, or the claim may not be covered by any policy at all.

• Act happens in 2023, claim filed in 2026 while a continuous claims-made policy is active with a retroactive date before 2023: covered.
• Act happens in 2023, but the business let coverage lapse before switching carriers with no tail coverage purchased: likely not covered by either policy.

Why the Retroactive Date and Tail Coverage Matter So Much

Because coverage depends on an unbroken timeline, switching carriers, letting a policy lapse, or closing the business creates real exposure for claims tied to past work. This is why extended reporting periods (tail coverage) exist: they let a business report claims after the policy ends for acts that happened while it was active. Skipping tail coverage when closing a business or changing carriers is one of the most common and costly mistakes with claims-made coverage, since a client can sue over work performed years earlier with no policy left to respond.

Where Claims-Made Policies Are Common

Most professional liability, errors and omissions, employment practices liability, and directors and officers policies are written on a claims-made basis, largely because the gap between a professional mistake and someone actually filing a claim over it can be long. General liability, by contrast, is almost always occurrence-based, since property damage and bodily injury claims tend to surface much closer to when the incident happened.