The most important aspect of Professional Liability Insurance that no one ever asks about is the reporting of claims. While it is printed everywhere, no one ever asked about “Claims Made” reporting. Our coverage (as is that of all of our competitors) is written on claims made basis.
Most insurance polices that educators are familiar with are “occurrence-based" reporting such as your homeowners and auto coverage. As I explain below there are important differences between the two
Because both the occurrence and the reporting of the claim Coverage under an occurrence policy is triggered based upon when the accident or injury happened; thus, the policy in force on the date of the accident responded to the claim regardless of when the claim was presented to the insurance company. For example, if parent was unhappy with your work in 1985 but did not make a claim itself until 2003, the 1985 policy would cover the loss.
In a claims-made policy, coverage is triggered if the claim is made during the policy period for an injury or damage that occurred while the policy was in force. The new insurance company is no longer responsible for any losses occurring prior to the policy.
As a practical matter this means that if you cancel your coverage. It is like it never existed. Claims that are reported after the policy expiration are not covered.
So EducatorProtect offers claims made coverage that we know. What you probably didn’t know is that all of our competitors offer the even more restrictive “Claims made and reported” policy form which requires that the Claim actually be reported to the insurance company during the policy period. This can create peril if a claim or potential claim is brought near the end of the policy period.
In the next entry, we will discuss some of the nuances of claims made coverage such as extended reporting periods, retroactive dates and your important responsibilities in the event of claim. Not knowing these could jeopardize your coverage.