For those policies written on an “occurrence” basis, it is fair to say that most clients have a good idea of the definition of a claim. However, there are several coverages written on a “claims-made” basis including professional liability, employment practices, D&O, etc. How well do your clients know what constitutes a “claim” under these policies? Probably not as well as you may want to believe.
There are some potentially significant ramifications if claims are not reported when they should be. Many of the “claims-made” forms are actually written on a “claims-made and reported” basis which requires that the claims be reported during the policy period. Failure to do so could result in a lack of coverage.
For those policies written on a “claims-made” basis, it is suggested the agency include a document with the policy that spells out that the coverage is on a “claims-made” form and the importance of being aware of what constitutes a claim. If the policies are delivered, attention should be brought to this document.
While there are some similarities to the definition of a claim, it should not be assumed that each policy has the same exact definition. In many situations, the definition includes a “written demand for money or services”. However, there are some “claims-made” forms where an oral complaint is included in the definition.
Bottom line, it is important that clients understand the differences and the agency should consider providing a document that encourages a better understanding. The document should also include a statement that advises the client that if they have any questions on this issue to contact the agency claims staff.