Claims-Made Insurance Policy Requirements

D

In many states, a claims-made insurance policy is required to contain an extended-reporting clause, provide for purchase at the policyholder's option, and provide for automatic tail coverage. Therefore, the correct answer is D, "All of the above."

A claims-made insurance policy is a type of liability insurance that provides coverage for claims made against the policyholder during the policy period, regardless of when the alleged incident occurred. This is in contrast to an occurrence policy, which covers claims arising from incidents that occur during the policy period, regardless of when the claim is made.

One of the challenges of claims-made policies is that they may not provide coverage for claims made after the policy expires, even if the alleged incident occurred during the policy period. To address this issue, an extended-reporting clause, also known as a "tail" provision, can be included in the policy. This clause allows the policyholder to report claims that arise after the policy has expired, as long as the incident occurred during the policy period. The extended-reporting clause may require the payment of an additional premium.

In addition to the extended-reporting clause, claims-made policies may provide for the purchase of additional tail coverage at the policyholder's option. This allows the policyholder to extend the reporting period beyond the expiration of the policy, usually for a set period of time.

Finally, some states may require claims-made policies to provide for automatic tail coverage in certain circumstances, such as the retirement or death of the policyholder. This ensures that the policyholder is not left without coverage for claims that arise after the policy expires.

In summary, a claims-made insurance policy may be required to include an extended-reporting clause, provide for the purchase of additional tail coverage, and provide for automatic tail coverage in certain circumstances, depending on state regulations.