Claims-made policy as opposed to occurrence policy is a typ of insurance policy that works when a claim is made. In case of occurrence policy - it works when the event occurs. A claims-made policy should be purchased when there can be a delay between occurrence and filling the claim.
In some cases the situation can be reported long after it happened. For example, errors in financial statements can be found 1-2 years after the statements were prepared. In that case the claims-made policy is a good solution.
You should note that insurance companies sometimes offer similar, but more restricted policy - claims-made and reported policy. That means that the claim has to be reported in the period when policy is active. That is much less desirable for business, because it requires continuous policy, which is more expensive.
- Doherty, N. A., & Singer, H. J. (2003). The benefits of a secondary market for life insurance policies. Real Property, Probate and Trust Journal, 449-478.
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