What kind of basis does professional liability insurance operate on?

Professional liability insurance typically operates on a claims-made basis. This means that the coverage is triggered when a claim is made against a professional during the policy period, regardless of when the incident that led to the claim actually occurred. As long as the policy is in effect when the claim is filed, the insurance will respond.

This type of insurance is particularly relevant for professions where there may be a significant time lag between the provision of services and the filing of a claim, allowing professionals to have legal protection against claims that arise after their services have been delivered. It's essential for ensuring that professionals are covered for services rendered in previous years, provided they maintain a continuous claims-made policy.

On the other hand, an occurrence basis would cover incidents that took place during the policy period, regardless of when the claim is filed, which is not characteristic of how professional liability insurance is structured. The other options, like excess basis, pertain to additional coverage that kicks in when primary coverage limits are exhausted, and comprehensive basis does not align with the standard definitions in insurance terminology. Thus, claims-made is the correct classification for how professional liability insurance operates.