Explain what a "claims-made" policy means.

A "claims-made" policy is a type of insurance coverage that is designed to provide protection for claims made during the policy period, regardless of when the incident that resulted in the claim occurred, as long as it happened after a specified retroactive date. This means that if a claim is reported to the insurer while the policy is in force, it will be covered, even if the incident itself happened prior to the current year or policy expiration, as long as it falls within the coverage parameters established by the policy.

This structure is particularly useful for professions where claims may arise years after the service has been rendered, such as medical malpractice or professional liability. Essentially, the key feature of a claims-made policy is its focus on the timing of the claim rather than the timing of the event that led to the claim.

In contrast, policies that cover claims from previous years or that never expire would not fit the definition of a claims-made policy, as they either provide broader historical coverage or are continuous without a termination date. The notion of covering only high-value claims does not align with the standard definition of claims-made policies either, as these policies can apply to a range of claims regardless of their financial magnitude.