AIM Newsletter - Vol. XV, No. 2 Fall 2005: Ask The Underwriter

Q.	Why is it necessary to complete an application each year?


A.	The claims-made policy is not a continuous, renewable policy. A new application is required for coverage after each expiration. Underwriting relies upon the statements in the application to determine if any changes have occurred during the previous policy period. Upon underwriting review and premium payment, the AIM policy is issued. The application attaches and is made a part of the policy.


Q.	Will my premium go up if I report a claim?


A.	Probably not. In most cases, the premium does not increase due to the reporting of a single claim. The frequency and severity of multiple claims reported is reviewed to determine whether an increase in premium is warranted.


Q.	When does "tail" coverage become necessary?


A.	Professional liability policies are written on a "claims-made" form and all coverages cease as of the expiration date. Tail coverage (an "extended reporting endorsement" ) provides coverage for claims reported after the expiration date of the policy. Tail coverage may be necessary when a claims-made policy is replaced subject to an advanced retroactive date (which bars coverage for certain years). Tail coverage is most frequently requested when the claims-made policy is cancelled or not replaced (e.g., when an attorney retires or leaves the practice of law)

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