This type of policy provides protection for claims that ‘arise and are reported’ while you have a policy in force. You are covered up to the policy limits in effect at the time the claim is reported. Therefore, a physician is only covered if the claim is actually filed while the policy is in force. To be protected for claims which are reported after the policy has been canceled, you must purchase ‘tail coverage’, (Extended Reporting Period endorsement), or obtain similar protection from a subsequent carrier. A claims-Made Policy must continue in force to provide protection, or be replaced by tail coverage. When you elect to change claims-made carriers, ‘Prior Acts Coverage’ must be obtained to cover your exposure from your first day of claims made coverage.
For example: A physician had a claims-made policy from January 2008 to January 2009, at which time the policy was not renewed, and tail was not purchased. In February 2009, a patient treated in 2007 files a claim against the physician. The physician would have no protection against this claim, because the claim was not reported during the policy period.