Virginia Property And Casualty Practice Exam

A claims-made policy is designed to cover claims that are made during the policy period, specifically those claims that are reported while the policy is in effect, regardless of when the incident that caused the claim occurred. This means that if an event happens prior to the policy period but the claim is reported after the policy has started, it will not be covered unless the incident occurs after the retroactive date specified in the policy. In contrast, an occurrence policy covers claims based on the date when the actual event causing the claim occurred, rather than when the claim is reported. This coverage is triggered as long as the incident happens during the coverage period, regardless of when the claim is filed. Understanding this distinction is crucial for policyholders because it affects when claims can be reported and how coverage operates in relation to the timing of incidents and claims. This differentiation also underscores the strategic importance of choosing the appropriate type of insurance based on risk management needs.