What distinguishes a claims-made policy?

A claims-made policy is characterized primarily by its coverage for claims that are made during the policy period, regardless of when the incident leading to the claim occurred. This means that if an incident occurs after the policy is purchased, coverage is still contingent upon a claim being made while the policy is active.

For instance, if an event happens during the policy period but the claim is not filed until after the policy expires, that claim would not be covered under a claims-made policy unless an extension or tail coverage is purchased. This aspect is crucial for insured parties because it defines when the actual coverage can be utilized—specifically, during the time the claims are presented to the insurer.

The other options do not accurately reflect the nature of claims-made policies. Only covering incidents post-purchase does not allow for previous incidents to be claimed while the policy is active. Excluding claims related to professional negligence does not capture the essence of claims-made policies, as they are often specifically used in professional liability contexts precisely to address negligence claims. Lastly, the validity of the policy being tied to a geographic area does not define claims-made policies; instead, coverage terms are typically more focused on the claim-makings and not the location.