Claims-Made Policy

A claims-made policy covers you for claims that are made against you and reported to your insurer during the current policy period. It is the standard basis for professional indemnity insurance in Australia.

The key thing to understand is that what matters is when the claim is made, not when the work was done. If someone lodges a claim against you today for work you completed two years ago, your current policy responds - as long as the work falls after your retroactive date.

Why It Matters

• Professional indemnity insurance in Australia almost always operates on a claims-made basis.
• You need to maintain continuous cover. If you let your policy lapse, you could lose protection for past work.
• You must report potential claims or circumstances that could lead to a claim as soon as you become aware of them.
• Switching insurers without understanding this can leave gaps in your cover.

How It Works

• You do work for a client in 2024.
• The client discovers a problem and makes a claim against you in 2026.
• Your 2026 policy responds to the claim, not your 2024 policy.
• If you had no policy in 2026, you would have no cover - even though you were insured when the work was done.

Simple Examples

• An architect completes a building design in March. Two years later the client discovers a structural issue and lodges a claim. The architect’s current PI policy picks it up.
• An IT consultant finishes a project in January and lets their PI insurance lapse in June. A claim arrives in September. There is no cover because no policy was in place when the claim was made.
• A financial adviser notifies their insurer about a potential complaint from a client. Even if the formal claim comes later, the notification locks it in to the current policy period.

Common Mistakes or Misunderstandings

• Thinking you’re covered after you cancel your policy. Once a claims-made policy ends, there is no cover for new claims unless you take out run-off cover.
• Confusing it with occurrence-based cover. Public liability works on an occurrence basis, which is a different trigger altogether.
• Not reporting potential issues early. If you wait until a formal claim arrives, your policy period may have changed and the new insurer might not accept it.
• Assuming old work is automatically covered. It depends on your retroactive date, which sets the earliest date your policy will reach back to.

What if you have gaps in cover?

If you’ve had gaps in your PI cover or your retroactive date doesn’t go back far enough, it’s not always a dead end.

We’ve helped clients source policies with older retroactive dates, and in some cases, unlimited retroactive cover. The insurer will usually charge a loading for the additional risk (assuming no known claims), and it’s not always guaranteed. But it’s something we’ve done successfully, so it’s worth asking.

If you think this applies to you, get in touch with us and we’ll look at your options.

When to Speak to a Broker

If you’re buying professional indemnity insurance for the first time, switching insurers, closing your business, or unsure whether you need to notify a potential claim, a broker can walk you through how claims-made cover applies to your situation.

Need help?

If you want clear advice on how claims-made cover works for your profession, reach out to Tank Insurance and we’ll explain it in plain English.

Related Terms

• Occurrence-Based Policy - The alternative trigger basis used for public liability and property insurance.
• Retroactive Date - The earliest date your claims-made policy will cover incidents from.
• Run-Off Cover - Extended cover that protects you after a claims-made policy ends.