Alabama Insurance Adjuster Practice Exam

What type of policy requires claims to be reported during a specific time period for coverage?

1. Occurrence-based policy

2. Indemnity policy

3. Claims-made policy

4. Modular policy

The correct answer is: Claims-made policy

A claims-made policy is designed to provide coverage for claims that are reported during a specific time period. This type of insurance is particularly common in professional liability and medical malpractice insurance. It is structured so that coverage is only triggered if the claim against the insured is made during the policy period, regardless of when the actual incident occurred. This emphasizes the importance of timely reporting of claims so that they fall within the boundaries of the policy. In contrast, an occurrence-based policy provides coverage for incidents that occur during the policy period, regardless of when the claim is filed. An indemnity policy refers to the principle of compensating for loss or damage but does not specify a reporting requirement for claims. A modular policy combines different types of coverage but isn't defined by a claims reporting timeframe. The specific requirement for claims to be reported within the policy duration is a key distinguishing feature of claims-made policies.