Reply by Korey Humphreys on 2/28/07 1:46pm
Msg #177549
Re: I know what E&O means-what does:Is this aClaims Made Policy?
Claims-Made Basis v. Occurrence Basis. An E&O liability insurance policy will usually be issued as a "claims-made" policy. This is not the standard form of coverage with which most people are familiar.
Rather than coverage applying to any "occurrence" during the policy period, coverage instead applies to any claim made during the policy period.
Thus, in a claims-made policy, coverage will not continue after the policy period has expired. So if something happens while covered, but a claim isn't made until sometime after the policy period, the claim isn't valid. By contrast, in a comprehensive general liability policy that covers occurrences arising during the policy period, claims made after the expiration of the policy period, but based on events that occurred during the effective period of the insurance, are covered by the policy.
On the surface, it may appear that a claims-made policy enjoys an advantage with respect to events that took place prior to the effective date of the policy. A comprehensive general liability policy will not apply to these claims. However, a claims-made policy also will not apply to these claims, even when the claims are made during the policy period. This apparent contradiction is explained by the fact that the claims-made policy will exclude from coverage any claims based on an event that occurred before the effective date of the policy.
In short, a claims-made policy usually offers less effective coverage, but accordingly is less expensive for an insurance company to issue. This savings may result, in theory anyway, in lower premiums for the insured party.
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Does this help?
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Reply by Dennis D Broadbooks on 2/28/07 1:52pm
Msg #177553
You Need to Understand a Claims Made Policy...
...before answering that question. If I'm reading your post correctly (which isn't a given today) most E&O policies are written on an "occurence" basis as opposed to "claims made". The difference between the two types is that in order for a claim to be covered under a "claims made" policy, the claim itself must be FILED with the insurance company during the policy term. To give an example let's take the policy period of the claims made policy to be 03/01/2006 to 03/01/2007. A covered loss occurs on 02/28/2007 but is not FILED with the insurance company until 03/02/2007. Because the claim wasn't FILED with the insurance company until AFTER the policy period, there's no coverage. You can purchase an addition to the claims made policy called a "tail" which extends the time after the policy expires for a claim to be filed. An occurence policy on the other hand WOULD pay for a covered loss that occured DURING the policy period (03/01/2006 to 03/01/2007) no matter when it was filed. Sometimes there are limits on an occurence policy as to how long after the policy period is over that a claim must be filed, but you'd need to read the policy language to determine that.
Please don't take this as insurance advice as it's not intended in that vein. Contact an insurance agent in Florida or the company writing your E&O for a more state specific opinion on what type of policy you currently have.
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