Claims-Made Policy

A policy that responds only to claims first made against the insured and reported to the carrier during the policy period, regardless of when the underlying act occurred.

A claims-made policy is a liability insurance form that responds only to claims first made against the insured and reported to the carrier during the policy period, regardless of when the underlying wrongful act occurred. The trigger is the date the claim is asserted, not the date the alleged act took place. The form is the standard structure for professional liability, Directors and Officers, Errors and Omissions, Cyber, and Generative AI Liability coverage.

Every standalone third-party Generative AI Liability form available in the market today is written on a claims-made basis (parametric and performance-warranty AI products like Munich Re's aiSure follow a different trigger structure). This matters because most AI builders' prior insurance experience is with Commercial General Liability, which is written on an occurrence basis (the policy in force when the act occurred responds, even if the claim arrives years later). Switching to claims-made changes which policy period the buyer must keep continuously in force to preserve coverage for past conduct.

The form pairs with two other mechanics that do most of the practical work: the retroactive date, which sets the earliest covered wrongful act, and the extended reporting period (often called tail coverage), which gives the insured a window to report claims after the policy ends. Together, retroactive date, policy period, and extended reporting period define the full temporal scope of a claims-made program.

For a Gen AI deployer the consequence is that a single year of coverage is not a permanent answer. Claims from a 2026 deployment may surface in 2028 or 2029, and the policy in force at that later date (with a retroactive date reaching back to the 2026 deployment) is what responds. Letting a claims-made policy lapse without purchasing a tail strips coverage for the entire prior period.

Frequently asked

How is a claims-made policy different from an occurrence policy?

An occurrence policy responds based on when the underlying act took place; the policy in force on the date of injury or damage answers, even if the claim is asserted years later. A claims-made policy responds based on when the claim is first made against the insured and reported to the carrier, regardless of when the underlying act occurred. Commercial General Liability is typically occurrence; professional liability, D&O, E&O, Cyber, and Gen AI Liability are typically claims-made.

Why are all Gen AI Liability policies written on a claims-made basis?

The exposures are financial loss claims rather than physical injury, and the lag between an AI output and the resulting claim can be years. Claims-made structure lets carriers price each year against the current legal environment rather than committing to defend acts indefinitely into the future. It also aligns Gen AI Liability with adjacent towers (Tech E&O, Cyber, Directors and Officers), which simplifies coordinated defense when a single AI claim implicates multiple policies.

What happens if I let a claims-made policy lapse?

Coverage for prior acts terminates unless the insured purchases an extended reporting period (tail). Without a tail, a claim asserted after the policy expires is not covered, even if the underlying conduct occurred while the policy was active. For Gen AI deployers, that means a 2026 deployment producing a 2028 claim is uncovered if the 2026 policy was not renewed and no tail was bound. Tail terms are typically negotiated at policy inception.

Related terms

generative AI liability insurance overview

General information, not legal or insurance advice.