What does 'claims-made' insurance imply in this context?

'Claims-made' insurance specifically indicates that the coverage applies only to claims that are made during the time the policy is active. This means that for a contractor to be covered under this type of insurance, the claim must be reported while the policy is in effect, regardless of when the incident that triggered the claim occurred.

This arrangement serves to protect insurers from having to pay for claims that may arise long after the policy has expired, allowing for a more predictable assessment of risk and premium pricing. When a contractor holds a claims-made policy, it is vital for them to maintain continuous coverage to ensure that any potential claims are covered as long as they are reported within the active policy period. If the policy lapses, any claims emerging after the lapse would not be covered, making timely insurance renewal critical for ongoing protection.

Understanding this concept assists contractors in managing their risk and ensuring they have appropriate coverage when providing services.