What is a defining feature of claims-made coverage?

A defining feature of claims-made coverage is that it only covers claims made during the policy period. This means that for a claim to be eligible for coverage, it must be reported to the insurer while the policy is active. Claims-made policies are particularly common in professional liability insurance, where timely reporting of claims is crucial for managing risk.

This structure encourages policyholders to promptly report incidents they believe might lead to claims. It emphasizes the importance of having the policy in place not just for past incidents but specifically at the time a claim is made. As a result, claims-made policies typically include "retroactive" coverage that can protect incidents that occurred before the current policy period, but only if those incidents are reported while the policy is active.

On the other hand, the other options do not accurately define claims-made coverage. The retroactive nature of some claims-made policies is not a universal feature and depends on the specific terms of a policy. Coverage for future incidents is not characteristic of claims-made policies, as they are strictly related to what is reported during the active period of the insurance. Lastly, the idea that all incidents are covered regardless of the policy period applies more to occurrence policies, where coverage is triggered by the incident itself, not when the claim is made