Claims Made Policy

How does claims made work on a professional liability policy for architects/engineers?  Claims made is the most common type of policy for professional liability.

Claims made means that the policy that is in place at the time of the claim is the policy that will respond to the claim.  For example, your firm’s policy term is 9/1/2022-9/1/2023.  The claim is received on 8/23/2023 from your firm’s client.  The policy term listed above is the policy term that will respond to the claim.  It is not when the project was designed or constructed, it is when the claim is reported.

The same holds true for a pre-claim.  If your firm is notified of a circumstance that may lead to a claim on 8/23/2023, the same policy period in the example above will respond.

This differs from an occurrence policy.  The policy period that will respond is the date of the occurrence, not the date the claim was made.  If the claim is made on 8/23/2023 but the actual occurrence of claim was on 7/20/2022 then the previous policy period (9/1/2021-9/1/2022) will respond.  This type of policy is common with general liability, not professional liability.

The reason professional liability policies have claims made is because with design work the day you design the project is not the day your firm will receive the claim.  Claims for design professionals, on average, are reported two to three years after substantial completion of the project.

With that, the retroactive date of the professional liability policy is very important.  The policy must be in place at the time of the project and the time of the claim.   Verify on your policy what the retroactive date is for your firm.

If you have any questions about a claims made professional liability policy please call, or email, your Professional Underwriter agent for assistance.