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Attorney Malpractice Insurance PolicyThere is a major key difference between claims-made vs occurrence insurance policies.

Most professional liability policies (including all accountant and lawyer policies sold in the United States) are ‘claims-made’ or ‘claims-made and reported’. With a claims-made policy form the insurer on the risk at the time the claim is made is liable for the claim, not the insurer on the risk when the act occurred, hence the name claims-made.

Most people are familiar with occurrence (Auto, Home, Business Owners coverage, etc) policies where the insurer that is on the risk when the act ‘occurred’ is liability for the claim regardless of when it was reported, hence the name ‘occurrence’ policy.

Unlike an ‘occurrence’ policy, with a ‘claims-made’ policy form it is important that the insured maintains continuous claims-made coverage to cover past acts.  The continuous claims-made coverage maintains their ‘prior acts date’ or ‘retro-active date’ (For more information on prior acts click on (Prior Acts Coverage is an Essential Component of a Claims-Made Policy).  When an insured decides to stop claims-made coverage to protect their past acts an Extended Reporting Period or Tail must be purchased.  Shortening or losing a prior acts date will expose the entity to uninsured losses.

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