Claims-made liability: protect the history when changing insurers

The business question

Some professional policies respond according to when a claim is made and reported, with additional conditions concerning earlier work. Changing the insurer without examining those conditions can create a gap even if both old and new policies appear continuous on a calendar.

Understand the mechanism

Claims-made and event-based arrangements must be distinguished in the contractual wording. Retroactive dates, known circumstances and reporting conditions can matter. Extended reporting or run-off arrangements are policy-specific questions; they should never be assumed to exist just because the business stops trading.

Hypothetical business case

A fictional architect changes insurers after several years of projects. A client later alleges an error in an earlier design. The firm needs to know which policy could respond based on its trigger, retroactive terms and reporting history, rather than assuming the policy held during the project automatically applies.

Decisions before you commit

Before cancellation, list completed work, known complaints and relevant dates. Ask both insurers for a written transition analysis and discuss reporting options. Treat disclosure of circumstances seriously and obtain specialist advice where an allegation or potential claim is already known.

Your evidence pack

Keep old policies, endorsements, project dates, notifications and transition correspondence. Do not discard historical records after renewal. Set retention and access procedures suitable for the profession, with legal guidance where needed.

Stress-test the decision

Build a timeline with policy periods, project dates and the first indication of a possible allegation. The timeline is a factual tool, not a coverage determination. Ask what the policy requires when a circumstance is known before a formal claim arrives, and how that reporting affects a later claim. Avoid notifying only one insurer by habit if the applicable arrangements are uncertain; obtain professional guidance. When the firm stops trading, consider the availability, scope and cost of extended reporting. A price saving at renewal is incomplete if historical exposure has been left unexamined.

Trade-offs and implementation

The price of changing insurers should include the continuity terms obtained, not only next year’s premium. A new policy with a different retroactive position may create an incomparable quotation. Ask for an explicit description of prior work, reporting windows and known circumstances in the transition. Those conditions need to be understood before the old policy ends.

Record the first complaint accurately even if the customer has not asked for money. Whether it must be notified depends on the wording and guidance, so consult promptly rather than waiting for litigation. Keep the original correspondence and subsequent updates. At closure or retirement, identify who will receive later claims and maintain access to old documents. A run-off or extended reporting option has its own scope and duration; it is not a universal guarantee. The company’s objective is an intelligible chain of protection and records across time, with any gap recognised and addressed before a problem arrives.

Confirm how notifications are acknowledged and retain that evidence separately from internal discussions. The record should show what was sent and when, rather than only that somebody intended to contact the insurer.