In the previous example, assume a loss occurs in 2003 but the resulting claim is not presented until 2005. A claims-made policy in effect during 2003 would not provide coverage for the claim. Rather, the 2005 claims-made policy would be called upon to respond to the claim. In contrast, an occurrence-basis policy in effect in 2003 would respond to the 2005 claim, since the occurrence resulting in the claim took place in 2003.

The mechanics of claims-made D&O policy forms are not often as simple as depicted in the above example. Definitions, claim provisions and other reporting requirements are integral factors in defining the scope of the policy's claims-made features.

The term trigger, which is used frequently in discussions of claims-made coverages, refers to the events or circumstances that actuate the policy's coverage. To determine the policy's trigger requirements, it is necessary to locate and identify the following claims-made features and requirements within the policy form being reviewed. These elements combined constitute the policy trigger.

1.  What constitutes a claim and when is a claim made?

2. What are the requirements in reporting the claim to the insurer?

3. What are the time limitations regarding when the wrongful act is deemed to take place?

The policy provisions that answer these questions are often not easy to find, as they may be hidden in the most unexpected parts of the policy. In some cases there may be nothing in the policy to answer the question. For example, while most insurers define claim, many policies do not contain a claim definition.

What Constitutes a Claim?

A good place to start in evaluating the important elements of any claims-made policy is the definition of claim. An example of a policy definition of claim is given below. For a further explanation, refer to “Claim and Potential Claim” in the Definitions section.

“Claim” shall mean any judicial or administrative proceeding initiated against a Director or Officer in which such Director or Officer may be subjected to a binding adjudication of liability for damages or other relief, including any appeal therefrom.

Chubb, 14-02-0943 (1-92)

The definition of claim varies widely in D&O policies. The absence of a definition of claim is not a negative policy feature. Some policies that do not define claim provide more liberal coverage than policies that restrictively define claim.

Claim-Reporting Requirements to the Insurer

Claim-reporting requirements establish when claims made against the insured must be reported to the insurer. Often the policy requires that the claim be reported to the insurer during the policy period or any extended reporting period, or within a specified number of days after claim is made. Sometimes language in the insuring agreement includes such requirements, but most policies provide a more elaborate description elsewhere in the policy under captions such as Notice of Claims, Notice, Claim Reporting, etc. Some examples are given below.

Notice Required During the Policy Period