An insurance policy must be able to say which losses it covers, and for that it needs a date. In property lines that date is obvious: the fire occurred on March 14, the policy in force on March 14 responds. In professional liability no such event exists. Three dates present themselves and they may fall in three different years: the date of the fault, the date the loss appears, and the date the claimant writes. The contract must choose one, and that choice is the most consequential thing it contains.
Two systems exist, and they must be named before being compared. The occurrence basis attaches the loss to the date of the fault: the policy in force at the moment of the error responds, even if the claim arrives fifteen years later. The claims-made basis attaches the loss to the date the claimant makes a claim: the policy in force at the moment of the letter responds, even if the error is old. Both are coherent, neither is fraudulent, and they produce opposite results on the same file.
The claims-made basis prevailed in this line for a reason that is not ideological but accounting, and knowing it helps make sense of the rest. An insurer covering on an occurrence basis does not know, at the close of its financial year, how many losses it carries: faults committed this year will produce claims for a decade, and it must reserve for losses it does not know about. That is what the trade calls long-tail development, and it leaves a year's result uncertain for years. The claims-made basis closes the year: whatever was not claimed this year will not be claimed on this policy.
One must then understand what the claims-made basis transfers, since it removes nothing, it moves something. The risk of the old fault does not disappear: it passes from the insurer to the insured, in a precise form, that of the obligation to be insured at the moment the letter arrives. A professional on a claims-made basis must therefore be covered not when it works, but when it is accused of having worked badly, which is counter-intuitive and which explains the next two lessons: retroactive cover looks backwards, extended reporting looks forwards, and both exist only to repair what that displacement opened.
A point of vocabulary is needed here, because it decides whole files: what the contract calls a claim is not what ordinary language calls one. Most policies define it, and the definition is often wider than expected: a formal demand, a writ, but sometimes also a simple letter expressing an intention to seek redress, or even a summons to a preliminary investigative measure. A professional who receives a letter of reproach and files it away without notifying may have received a claim within the meaning of its policy, and will learn the consequences two years later.
It must be added that the coexistence of both systems in one market produces accidents, and that they occur at the boundaries. A professional moving from an occurrence contract to a claims-made contract may find itself covered twice over some periods and not at all over others, depending on the retroactive date chosen. The reverse move produces the same thing. Nobody notices at the moment of the change, because neither policy is at fault: it is their articulation that is, and the articulation belongs to neither insurer.
The method therefore comes to three questions to put to any professional liability policy, before even looking at the limit. On what basis is the cover triggered. How does the contract define a claim, and is that definition wider than the ordinary sense. And from what date are prior faults picked up. A professional able to answer those three about its own contract knows, to the year, what is covered and what is not; the others will find out the day a letter arrives.
An engineering consultancy prepares in March 2019 a structural calculation note for a warehouse roof frame. The building is accepted in November 2019. In February 2024 deformation appears on two beams; the operator commissions a private expert report in June 2024 concluding that the design was under-dimensioned. The developer writes to the consultancy on September 12, 2025, claiming 1.1 million euros. The consultancy was insured on an occurrence basis until December 31, 2021, then on a claims-made basis from January 1, 2022 with another insurer, with a retroactive date set at January 1, 2022. Who responds?
The reflex is to look for which policy covered March 2019, and it is the wrong reflex: each contract must first be given its own basis, separately, before comparing. The first contract, on an occurrence basis, attaches the loss to the date of the fault, March 2019, which falls within its period: on that footing it responds, and its ending on December 31, 2021 is irrelevant, since on an occurrence basis the end of the contract does not extinguish faults committed while it ran. The second contract, on a claims-made basis, attaches the loss to the date of the letter, September 12, 2025, which falls within its period: on that footing it responds too, but subject to a condition that defeats it, the retroactive date of January 1, 2022. A fault of March 2019 predates that date, and is therefore outside its cover. The result is that the first contract responds alone, and that is the opposite of what the consultancy probably believes, since its current insurer is not concerned and the one it left four years ago is. Three steps follow. Notify the former insurer immediately, which means finding the policy number of a contract canceled in 2021, and that presupposes archives that a firm of this size may not have. Notify the second as well, out of prudence and without waiting for a refusal, since a written refusal is worth more than a silence if the characterization comes to be argued. And note for the future the file's real lesson: the retroactive date of January 1, 2022 created a gap for every prior fault, and that gap was closed here only by the survival of the earlier contract, which exists only because it was written on an occurrence basis. A consultancy that had moved from one claims-made policy to another in the same circumstances would have no cover at all.
- 01Three dates present themselves and may fall in three different years: the fault, the appearance of the loss, the claim. The contract picks one.
- 02Occurrence basis: the policy of the day of the error. Claims-made: the policy of the day of the letter. Both are coherent and give opposite results.
- 03The claims-made basis prevailed to close the accounting year, not out of ideology: it removes the need to reserve for a loss nobody knows about.
- 04It does not remove the risk of the old fault, it moves it to the insured, which must be covered when accused rather than when working.
- 05What the contract calls a claim is often wider than the ordinary sense: a letter of reproach filed away without notification may be one.