To explain the difference it is easiest to first understand the unique circumstances that surround Professional Indemnity insurance. Please go and read the answers to What are the key dates?
To illustrate by example; With motor insurance when there is a claim there is no great time gap between the “accident” that gives rise to the claim and when the claim is made. A claim is made immediately following an “accident”. Professional Indemnity can be quite different. The claim can arise years after the incident that causes the claim. A “Claims made” policy is one in which the insurer will consider a claim they are informed of and the claim is first known about during the policy year. The incident that caused the claim could have been years ago – but a key date is the date on which the claim is first known and advised. A “Claims arising” policy is one which the insurer will consider a claim (at any time in the future) if the incident that gave rise to the claim occurred in the policy year. Most policies today are “Claims made” for the very simple reason that the insurer can “close his books” after the policy year. An insurer issuing a “Claims arising” policy can never close his
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