American Association of Critical-Care Nurses (AACN) Certification Practice Test

What is a characteristic of a claims-made policy?

1. Covers any claim reported at any time

2. Covers claims only when the incident occurs under the policy

3. Is the most expensive malpractice insurance

4. Covers incidents occurring after the policy expires

The correct answer is: Covers claims only when the incident occurs under the policy

A claims-made policy is specifically designed to provide coverage for claims that are made during the policy period. This means that for a claim to be eligible for coverage, the incident that caused the claim must have occurred while the policy is in effect. In other words, the policy does not cover claims that are reported after its expiration, unless specific extended reporting provisions are included. This coverage structure is particularly beneficial for professionals who are actively practicing during the policy period, as it provides financial protection against claims that arise from services rendered only during that time. Once the policy is terminated or lapses, any claims related to incidents prior to that cessation will not be covered unless there is a tail coverage option purchased, which extends coverage for a certain period after the policy ends. This is fundamentally different from other types of policies, such as occurrence policies, which cover any incidents that occur during the period of coverage, regardless of when the claim is made. As such, understanding how a claims-made policy operates is crucial for individuals in professions that are prone to liability claims.