A claims made policy is a type of liability insurance policy that is triggered when a claim is paid. This means that coverage applies only to claims made and paid during the policy period ,regardless of when the underlying event causing the claim occurred.
EXAMPLE:
A company purchases a general liability policy that covers them for claims made and paid during the policy period. If a third – party files a claim against the company for an event that occurred during the policy period and the claim is paid during the policy period, it is covered under the policy.