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1. Claims
Made Versus Occurrence:
Defines type of
insurance. Occurrence insurance responds to
the event (claim) on the basis of the date the event
occurred. Claims made insurance responds to the event
on the basis of the date when the claim is made.
2.
Retroactive Date:
The earliest
date which a claim can have taken place and be presented to
the insurance company and still be covered by the policy.
Retroactive dates are only present in claims made
policies.
3.
Effective/Expiration Date:
The effective
date is the first date the policy is in place and providing
coverage. The expiration date is the last date the policy
will be in place and providing coverage.
4.
Limits of Liability:
The total amount
the insurance company will pay on the insured's behalf. The
most common limits In California are $1 million per claim
and $3 million in the aggregate.
5. Per
Claim Limit:
The maximum
amount the insurance company will pay for any one claim made
during a covered period effective date to expiration date
and any extended reporting period.
In a $1M/$3M
policy, each claim has a $1 million maximum payment set by
the insurance company.
6.
Aggregate:
The maximum
dollar amount the insurance company will pay during the
policy period effective date to expiration date and any
extended reporting period).
In a $1M/$3M
policy, a maximum of three $1 million dollar claims can be
paid. ($1M x 3 claims = $3M).
7.
Extended Reporting Period:
The ERP is
available to be purchased from the carrier following the
expiration date of the policy. Allows an insured with a
claims-made policy to report claims within a specified
period of time. Also known as the "tail" period.
Note that no
additional coverage is given with the ERP, nor are
additional limits applied to the policy. The ERP only allows
the insured physician to report claims for a longer period
of time. Some carriers reduce the limits on extended
reporting periods.
8. Prior
Acts Coverage:
Purchased from
the new carrier when coverage is changed from one insurance
carrier to another. Prior Acts coverage makes all claims
that have occurred subsequent to the retroactive date and
are unknown by the insured to be claims or a circumstance
likely to give rise to a claim, the responsibility of the
new insurer. Also known as “Nose Coverage”.
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