What action triggers the need for an insurance claim under a claims-made policy?

In a claims-made policy, the critical factor that triggers the need for an insurance claim is that a claim must be made during the policy period. This type of insurance is designed to cover claims only when they are reported to the insurer within the specified time frame defined by the policy. Even if the incident that caused the claim occurred prior to the effective date of the policy, the policyholder is only covered if the claim itself is filed while the policy is active.

This approach reflects the nature of claims-made policies, which differ significantly from occurrence policies that cover incidents based on when they took place, regardless of when the claim is reported. Therefore, the timing of the claim filing is crucial for determining coverage under a claims-made policy.

As a result, the requirement for a claim to be made within the active policy period is a unique characteristic of claims-made policies, emphasizing the importance of informing the insurer about potential claims promptly within that designated timeframe.