Claims Made Insurance – What does it mean
An explanation of Claims-Made is provided below.
Claims Made Basis
The proposed insurance is issued on a ‘claims made’ basis.
This means that the policy responds to:−
- claims first made against the insured during the policy period and notified to the Insurer during that policy period, providing that the insured was not aware, at any time prior to the policy inception, of circumstances which would have alerted a reasonable person in the insured’s position that a claim may be made against the insured; and
- ‘claims circumstances’ notified pursuant to Section 40 (3) of the Insurance Contracts Act which states:‘where the insured gave notice in writing to the insurer of facts that might give rise to a claim against the insured as soon as was reasonably practicable after the insured became aware of those facts but before the insurance cover provided by the contract expired, the insurer is not relieved of liability under the contract in respect of the claim, when made, by reason only that it was made after the expiration of the period of insurance cover provided by the contract’.
After policy expiry, no new claims can be made on the expired policy even though the event giving rise to the claim may have occurred during the policy period. If during the policy period you become aware of circumstances which a reasonable person in your position would consider may give rise to a claim, and which you fail to notify to the insurer during the policy period, the insurer will not cover you under a subsequent policy for any claim which arises from these circumstances. Prior to commencing or renewing cover, you are required to report all circumstances of which you are aware and which a reasonable person in your position would consider may give rise to a claim during the existing policy period.
It is imperative that you make proper disclosure so that your cover under any existing, new, renewed, or replacement policy with insurers is not compromised.
The proposed insurance may be limited by a retroactive date either stated in the schedule or endorsed onto the policy.
Where the retroactive cover provided by the proposed policy is subject to such a date, then the policy does not cover any claim arising from actual or alleged act, error, omission or conduct occurring prior to the retroactive date.