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📌 Claims-made trigger is the coverage activation mechanism under which an insurance policy responds only to claims first reported to the insurer during the policy period, regardless of when the underlying wrongful act or event actually occurred. This stands in contrast to the occurrence trigger, where coverage attaches based on when the loss event took place. Claims-made policies dominate professional liability, directors and officers, errors and omissions, and cyber insurance markets, where long-tail exposures and latent injuries make occurrence-based pricing impractical.

🔄 Under a claims-made structure, two dates govern whether a claim triggers coverage: the retroactive date and the policy's expiration date. The retroactive date sets a floor — acts occurring before it are excluded — while the claim itself must be reported before the policy expires. Many policies include a reporting endorsement or extended reporting period (sometimes called a "tail") that allows the insured to report claims for a defined window after the policy ends, protecting against the gap that would otherwise arise when switching carriers. Insurers benefit because the claims-made approach gives them greater certainty over the timing and volume of reported losses, simplifying reserving and reducing the volatility associated with IBNR estimates.

⚠️ For policyholders and brokers, understanding the claims-made trigger is essential to avoiding unintended coverage gaps. A failure to maintain continuous, uninterrupted claims-made coverage — or to secure an adequate tail when a policy is canceled or non-renewed — can leave an insured exposed for acts that occurred during a prior policy period but are reported later. From the insurer's perspective, the claims-made trigger allows tighter control of underwriting exposure and enables more responsive repricing as risk conditions change, which is why it has become the default structure for most liability classes involving long emergence periods.

Related concepts

• Definition:Occurrence trigger
• Definition:Retroactive date
• Definition:Extended reporting period (ERP)
• Definition:Professional liability insurance
• Definition:Incurred but not reported (IBNR)
• Definition:Tail coverage