What is essential for an insurer to provide indemnity under claims made policies?

For an insurer to provide indemnity under claims made policies, it is essential that claims are made during the policy period. This type of policy is designed to cover claims that are reported within the specified term of the policy, which means that if a claim arises, it must be formally made to the insurer while the insurance coverage is active.

This requirement ensures that the insurer is responsible for claims that occur during a defined time frame, and it allows the insurer to manage risk and potentially set aside reserves for claims that are likely to be filed. If a claim is made after the policy period has ended, even if the incident leading to the claim occurred during the policy's active time, the insurer typically will not cover that claim.

Other options do not address the key distinction of claims made policies. For instance, the need for witness statements or claims to be settled within a year serves different purposes in claims processes but does not pertain to the essential nature of claims made policies. Similarly, stipulating a specific value for claims is arbitrary and not inherently tied to the operation of a claims made policy. Thus, the primary requirement is that claims must indeed be made during the policy period.