For many types of injuries, identifying the precise trigger for insurance coverage is not difficult because the injury and the event causing the injury appear simultaneously. For example, an auto accident or a slip or fall normally will cause immediate injuries that can be traced to one moment in time when the event occurred. An occurrence policy is the best way to insure this type of claim.

However, the kinds of latent injuries that typify long-tail claims are not so easy to pinpoint within a specific policy term. Latent injuries caused by asbestos; silica; beryllium; formaldehyde; toxic wastes; pharmaceuticals; and medical procedures can cause confusion. Is the trigger the moment the first contact (or mistake) was made; when the cumulative damage was done; when the diagnosis was made; or when the suffering began?

For exposures having long tails, the insurance industry conceived a way to make a single policy respond with contemporary limits to a claim presented during the current policy term
(i.e., a claims-made policy). This policy bundles past occurrences (the nose) into present coverage. It responds to a claim first made (look for clarification in the policy on what is meant by “first made”) during the policy period or any extended reporting period, for an occurrence that falls after the retroactive date but before the expiration date of the policy.

Most state laws have limited the types of risks that can be insured on a claims-made policy. This includes environmental liability; professional liability; medical malpractice liability; directors and officers liability; employment practices liability; fiduciary liability; excess liability; products liability; completed operations liability; employee benefits liability; and large risks qualified by some threshold for size.

Obviously, there is more complexity to this type of policy, creating a need to fully understand the implications. We can help you. Don’t hesitate to take advantage of our services.