What characterizes a claims-made basis of insurance?

A claims-made basis of insurance is specifically defined by the fact that coverage is only provided for claims that are made during the active policy period. This means that, for a claim to be valid under this type of insurance, it must be reported to the insurer while the policy is in effect. This characteristic distinguishes claims-made policies from occurrence-based policies, which cover any incident that occurs during the policy period, regardless of when the claim is made.

Choosing this answer reflects an understanding of how claims-made insurance operates, emphasizing the significance of the timing of when claims are reported as opposed to when the actual events occurred. Such policies are particularly relevant in fields like medical malpractice or professional liability, where claims might be made long after the services were provided.

The other options describe features that do not align with the nature of a claims-made basis. For instance, the option regarding coverage for any claim regardless of when it occurred pertains to occurrence policies. Additionally, while it may generally be true that claims-made coverage can be less expensive compared to occurrence policies, this is not a definitive characteristic of claims-made insurance itself. Lastly, the provision about automatically extending coverage after the policy ends does not apply to claims-made insurance, as coverage ceases at the end of the policy unless