What is the role of the insurer in a Claims-Made policy?

• A. To cover any claims regardless of the incident date
• B. To pay claims only for incidents reported during the policy period
• C. To frequently review policyholder activities
• D. To adjust the premiums based on claims history

Answer: (B)

In a Claims-Made policy, the role of the insurer focuses specifically on claims that are reported during the policy period. This means that a claim must not only occur during the policy period but also be reported to the insurer within that same timeframe to be eligible for coverage. The principle behind this type of policy is to create a clear connection between the period when the coverage is active and the reporting of any claims, which helps insurers manage risk and maintain clarity about their obligations.

This requirement distinguishes Claims-Made policies from other types of insurance, like Occurrence policies, which cover incidents regardless of when claims are filed, as long as the incidents occurred during the policy term. Therefore, understanding that the insurer's role is contingent on the timing of when claims are reported within the specified policy period is critical for grasping how Claims-Made coverage functions.