What is one function of a 'Claims-Made' policy?

A 'Claims-Made' policy is specifically designed to provide coverage for claims that are made and reported to the insurer during the policy period. This means that it ensures coverage is in place for any claims that occur within the time frame of the policy, regardless of when the incident that led to the claim actually took place.

This type of policy is particularly important in fields such as professional liability, where the timing of when a claim is made can significantly impact coverage. As long as the claim is reported while the policy is active, the insurer will cover the claim, which provides peace of mind to policyholders about their liability exposures during the effective period of the policy.

In contrast, other options suggest limitations or exclusions that are not characteristic of 'Claims-Made' policies. For example, the idea of covering unlimited claims is more reflective of occurrence policies, which cover any incidents that happen during the policy period, without regard to when the claim is filed. Additionally, the notion that claims would only be covered if reported after cancellation contradicts the fundamental principle of a claims-made approach, which automatically ceases to cover claims once the policy is no longer active. Excluding all liability claims does not align with the purpose of such a policy, which is centered on