A claims-made policy is typically triggered by claims made during the policy period; tail coverage is usually required; common in which lines?

• A. Property and casualty lines in general
• B. Auto liability
• C. Professional liability (E&O)
• D. Homeowners

Answer: (C)

The focus here is how claims-made policies operate and why tail coverage is essential in that setup. In a claims-made form, coverage responds to claims that are actually made during the policy period, not to incidents that occurred earlier. Because someone can discover and report a claim long after the service was provided, stopping or changing a claims-made policy could leave gaps in protection unless an extended reporting period, or tail coverage, is purchased to cover claims made after the policy ends for incidents that happened while insured.

This arrangement fits professional liability (E&O) especially well, since professionals like lawyers, accountants, consultants, and others often face claims years after the work was done, and client relationships can span across policy periods. Tail coverage ensures there’s no lapse in protection for those late-discovered claims.

In contrast, property, homeowners, and auto liability lines are typically written on an occurrence basis, where coverage depends on when the underlying incident occurred, not when a claim is made. With occurrence forms, there’s less need for tail coverage because the policy that covers the incident will also cover the resulting claim regardless of when the claim is filed.