Claims-Made E&O Insurance: Essential Protection for Professional Risks
What is Claims-Made E&O Insurance?
Claims-Made Errors & Omissions (E&O) insurance provides professional liability coverage only when both:
- The incident occurs after your policy’s retroactive date (if applicable)
- The claim is made while your policy is active
This differs from Occurrence policies that cover incidents based on when they happened.
Key Features of Claims-Made Coverage
🛡️ Lower initial premiums than occurrence policies
📅 Requires continuous coverage to maintain protection
🔙 Retroactive date determines coverage eligibility
🔮 Tail coverage available when canceling policy
How Claims-Made Coverage Works
Example Timeline:
- Policy active: Jan 2020 – Present
- Retroactive date: Jan 2020
- Incident: May 2021
- Claim filed: June 2023 (while policy active) → Covered
- Claim filed: Jan 2024 (after policy canceled) → Not covered (unless tail purchased)
Who Needs Claims-Made E&O?
✔ Professionals with long-tail risks (where claims may emerge years later)
✔ Businesses wanting lower initial costs
✔ Those required by client contracts
✔ Industries with evolving standards
Common Users:
- Medical professionals
- Architects/engineers
- Financial advisors
- IT consultants
- Legal professionals
Critical Components
1. Retroactive Date
- The earliest date incidents can occur and still be covered
- Typically matches policy start date
- “Full prior acts” coverage = no retroactive date restriction
2. Reporting Period
- Timeframe to report claims after policy ends
- Standard: 30-60 days
- Extended via tail coverage
3. Tail Coverage (Extended Reporting Period)
- Extends time to report claims after policy cancellation
- Typically costs 150-300% of final annual premium
- One-time purchase
Claims-Made vs. Occurrence Policies
| Feature | Claims-Made | Occurrence |
|---|---|---|
| Coverage Trigger | Claim made during policy period | Incident occurs during policy period |
| Premium Cost | Starts lower, increases over time | Higher but stable |
| Long-Term Protection | Requires tail coverage | Permanent after policy period |
| Best For | Cost-conscious professionals | Those wanting simplest protection |
Why Choose Claims-Made?
💰 Lower Entry Cost (premiums typically 30-50% less initially)
📊 Predictable Premium Scaling (known step-up increases)
🔄 Easier to Switch Insurers (with tail coverage)
Potential Risks
⚠️ Coverage Gaps if policy lapses
⚠️ Unexpected Tail Costs when canceling
⚠️ Retroactive Date Issues with new insurers
5 Essential Tips
- Maintain continuous coverage without lapses
- Preserve your retroactive date when switching carriers
- Negotiate full prior acts coverage when possible
- Budget for tail coverage if planning retirement/sale
- Document all work meticulously to defend future claims
Get Your Customized Coverage Today
✅ Free Policy Review of your current E&O protection
✅ Competitive Quotes from A-rated carriers
✅ Expert Guidance on retroactive date preservation