What does a Claims-Made Form in liability insurance signify?

• A. Claims are covered regardless of when they are filed
• B. Only claims arising during the policy period are covered
• C. Claims must be reported within 30 days of the incident
• D. Claims cover incidents that occurred before the policy was purchased

Answer: (B)

A Claims-Made Form in liability insurance signifies that coverage is applicable solely for claims that arise and are reported within the specific policy period. This means that for a claim to be valid under a Claims-Made policy, the incident leading to the claim must have occurred during the timeframe when the policy is active, and the claim itself must also be filed while the policy is in effect.

This structure is particularly important because it places emphasis on the timing of both the incident and the report of that incident. This is different from an occurrence policy, where coverage is provided for incidents that happen during the policy period, regardless of when the claim is filed. By requiring that the claim be both made and reported within the policy period, the Claims-Made Form helps insurers to manage risk more effectively, as they can have a more predictable understanding of the liability they are covering.

The other options present scenarios that don't align with the specifics of a Claims-Made policy. For instance, options discussing claims covering incidents outside the policy period or claims reported after a certain time frame do not accurately reflect the nature of this type of insurance coverage.