In short. The coverage basis decides which policy responds to a claim. On an occurrence basis, what counts is when the damaging event occurred; on a claims-made basis, when the claim arrived. The second paragraph of article 73 of the Spanish Insurance Contract Act has permitted claims-made clauses since 1995 and regulates two forms — retrospective and subsequent cover — which are not cumulative, with a statutory floor of at least one year. In large risks, moreover, those clauses are incorporated without the formalities of article 3. The real risk does not sit inside the policy in force: it sits in the change of insurer.
Professional indemnity accounts for 19.9% of premiums in the liability class with close to 9% of policies, according to ICEA figures reported by the trade press (2026). That proportion implies an average premium well above the class average — this is our own inference, not a published figure — and the reason is well known: these are risks that manifest late, where the damage surfaces years after the act that caused it. In them the question stops being how much the policy covers and becomes which of all the policies responds.
Spanish law has permitted claims-made cover since 1995. And it does not require one year of retroactive cover: it requires at least one year. That distinction decides who pays when you change insurer.
Two ways of dating a claim
The starting point is the first paragraph of article 73 of Law 50/1980, the Spanish Insurance Contract Act: under liability insurance the insurer undertakes to cover the risk of the insured incurring an obligation to indemnify a third party for loss and damage caused by an event provided for in the contract for the consequences of which the insured is civilly liable.
The provision speaks of an event. But years can pass between the event and the claim, and the contract must decide which of the two moments triggers cover. Hence the two bases:
- Occurrence basis. The policy in force when the damaging event occurred responds, regardless of when the claim is made. The insured is tied to a contract that may have been cancelled years earlier.
- Claims-made basis. The policy in force when the claim is made responds, provided the event occurred within the agreed retroactive period.
This is not a difference of nuance or of price: it is the difference between a policy you no longer hold responding and one you do. The scope actually granted is, in every case, governed by the particular conditions of each policy.
Are claims-made clauses lawful in Spain?
Yes, and the misconception is worth dismantling at the root: this is neither an unfair term nor a merely tolerated practice. It has been expressly permitted since Law 30/1995 added the second paragraph to article 73 of the Spanish Insurance Contract Act. That paragraph permits two distinct forms of temporal delimitation of cover:
- Subsequent cover form — the "tail", or extended reporting period. It permits cover to be confined to claims made "within a period of time, not less than one year, from the termination of the last of the contract's renewals or, failing that, of its period of duration".
- Retrospective form — the retroactive date. It permits cover to be confined to claims arriving during the policy period, provided cover extends to events occurring "beforehand, by at least one year from the date the contract takes effect, and this even where that contract is renewed".
The provision itself expressly classifies them as limiting clauses of the insured's rights, and therefore subject to article 3 of the same Act: they must be highlighted in a special manner and be specifically accepted in writing. With one weighty exception, which we come to below.
And here lies the most widespread error in the market. Spanish Supreme Court judgment 252/2018 of 26 April, handed down by the Full First Chamber in appeal 2681/2015, established that the second paragraph of article 73 regulates two different limiting clauses, each with its own requirements, so that those requirements are not cumulative. A policy is valid with a retroactive date and no tail, and equally valid with a tail and no retroactive date. Anyone who tells you the law obliges a policy to carry both is mistaken.
The second error, quieter than the first, is one of drafting: writing that "the law gives you a year". It does not give it. The law requires at least one year. It is a floor, not a period: nothing prevents agreeing a tail of twenty-four or thirty-six months, or wider retroactive cover. What cannot be agreed is less.
Do you know what retroactive date appears on your liability policy today? Ask us to read the wording.
The retroactive date and the extended reporting period are not the same thing
They are frequently confused, and they are opposite axes of the same diagram.
The retroactive date looks backwards: it determines how far back the policy accepts events that have occurred. An event before that date falls outside even if the claim arrives while the policy is fully in force.
The extended reporting period — the subsequent cover form — looks forwards: it determines how long after the contract ends a claim may still arrive and remain covered. An event that occurred during the policy period falls outside if the claim arrives after that period has expired.
The retroactive date protects your past; the tail protects your exit. A policy may have wide retroactive cover and a minimal tail, and vice versa. Checking only one of the two leaves half the contract unexamined, just as reviewing the main limit and not the sub-limits and the deductible does.
| Coverage basis | What determines cover | Minimum statutory requirement | Typical risk | When it suits |
|---|---|---|---|---|
| Occurrence | The date on which the damaging event occurred | Not subject to the delimitation in art. 73, second paragraph | Locating and triggering a historic policy, with old limits and old wording, years after cancellation | Risks that manifest immediately: public liability, tenant's legal liability, physical damage identifiable on the spot |
| Retrospective claims-made | The claim arrives during the policy period, for events after the retroactive date | Cover must extend to events occurring at least one year before the contract takes effect, and this even where the contract is renewed | The retroactive date resetting on a change of insurer and dropping the whole history | Risks that manifest late, with programme continuity: professional indemnity, products, directors' and officers' liability |
| Forward-looking claims-made (subsequent cover) | The claim arrives after termination, within the agreed period, for events during the policy period | Claims must be accepted during a period of not less than one year from the termination of the last renewal or of the period of duration | The tail expiring before the damage surfaces | Cessation of trading, sale of the company, dissolution, retirement of the professional |
The hole that opens when you change insurer
This is the point almost nobody explains, and the one that costs most. The gap in cover does not open inside one policy: it opens between two.
Follow the timeline of a technical services company with a policy on a claims-made basis:
- Year 1. It places the policy with insurer A. Retroactive date set at inception.
- Year 3. The damaging event occurs: a miscalculation in a delivered project. Nobody knows yet. Policy A is in force and the retroactive date covers that moment.
- Year 4. Renewal. The company moves to insurer B, which maintains the retroactive date at year 1.
- Year 6. Second renewal. The company moves to insurer C, on a better premium. The wording sets the retroactive date at its own inception date.
- Year 6, four months later. The client discovers the defect and claims.
The outcome is the one feared. Insurer C declines: the event predates its retroactive date. Insurer B is no longer in force and its policy carried no extended reporting period, so it does not accept claims made after its termination. Insurer A left two years ago. The event was covered at the time and the claim finds no policy to respond. There was no breach by any insurer: there was a renewal signed without reading a date.
Hence, at renewal, the first item to verify is not the premium but that the incoming policy's retroactive date links back to the real start of continuous cover. It is negotiable, and it is negotiated before signing. Two points complete the picture.
Prior knowledge. Claims-made policies exclude events and circumstances already known to the insured and not declared at inception. This is no whim of the wording: it connects with article 4 of the Spanish Insurance Contract Act, under which the contract is void if the loss had already occurred when it was concluded. Concealing a known circumstance does not transfer the risk: it leaves it orphaned.
Notification of circumstances. The correct move before changing insurer is to notify the outgoing insurer in writing of known circumstances that may give rise to a future claim. Done properly, it fixes cover in the policy under which the event is in fact covered, even though the claim arrives later.
Nor should two planes be confused: the coverage basis determines which policy responds; the limitation period for the action determines how long the injured party has to claim. They are independent, and a perfectly live action can find no policy behind it.
Before changing insurer, somebody should read both dates. Request a review of your liability programme.
When the company is sold or ceases trading: the tail
The subsequent cover form stops being a technicality the moment the activity halts or changes hands. If a company is sold, merged, dissolved or wound down, the policy is no longer renewed; but the events that occurred during the trading years are still there, and claims can arrive long afterwards. Without purchased subsequent cover — what the market calls run-off — no contract remains to respond.
It is particularly critical in corporate transactions and in directors' and officers' liability insurance, where the claim against the former board tends to appear once the buyer reviews the previous management. Where this form is agreed, the law requires claims to be accepted during a period of not less than one year from termination of the contract. In a share purchase, one year is rarely enough: it is precisely the period to negotiate upwards, before completion.
The same applies to the professional who ceases to trade. In assembly and installation work, the defect can appear seasons after the last invoice was issued.
If your company is a large account, article 3 does not protect you
This is the point no general-interest content flags, and it changes the negotiating position of a medium-sized or large company.
Everything above — the duty to highlight limiting clauses in a special manner and to obtain specific acceptance in writing under article 3 — rests on the mandatory character of the Spanish Insurance Contract Act. But the second paragraph of its article 44 provides that the mandate in article 2, which is precisely what makes the Act's provisions mandatory, does not apply to insurance contracts covering large risks.
Translated: in large risks the Spanish Insurance Contract Act is not mandatory law. And on that ground, claims-made clauses are validly incorporated without the formalities of article 3 and are enforceable against third parties, as Spanish Supreme Court judgment 545/2020 of 20 October established.
If your company exceeds the thresholds in article 11 of Law 20/2015 on the organisation, supervision and solvency of insurance undertakings, the temporal delimitation set out in your wording will apply to you exactly as drafted. A large account will not be rescued by the law from a badly negotiated wording. Only prior negotiation does that. It is why, in professional indemnity programmes for technical services, the discussion of dates weighs as heavily as the discussion of limits.
The role of an independent broker
Two quotations with the same premium and the same limit can leave irreconcilable temporal exposures: one with a retroactive date linked to the start of the programme, the other with the retroactive date reset at inception. On a comparison sheet they are identical. On a claim, one pays and the other does not. As an independent brokerage registered with the Spanish DGSFP under reference J0140, we act on the client's mandate: we read the temporal delimitation of cover before looking at the price, we negotiate the retroactive date and the extended reporting period as part of the wording, and when a claim arises we defend the company's position before the insurer.
That work matters most where several policies sit over the same risk, because each may carry its own basis and its own dates. We deal with it in detail when explaining how to coordinate liability, D&O and product cover, and on our liability page.
Frequently asked questions
What is a claims-made clause? The clause that ties cover to the moment of the claim rather than to the damaging event, provided the event occurred within the agreed retroactive period. Article 73, second paragraph, of the Spanish Insurance Contract Act permits these clauses and classifies them as limiting.
Are claims-made clauses lawful in Spain? Yes, since Law 30/1995 added the second paragraph to article 73. Spanish Supreme Court judgment 252/2018 of 26 April, handed down by the Full First Chamber, held that the provision regulates two distinct clauses whose requirements are not cumulative.
What is the retroactive date? The date from which the policy accepts events that occurred in the past. The law requires it to reach at least one year before the contract takes effect, and to do so even where the contract is renewed. One year is the statutory floor, not the period: more can be agreed.
What happens if I change insurer? That is the moment of greatest exposure. If the incoming policy sets the retroactive date at its own inception date, the earlier history is left uncovered even though the outgoing policy covered it. Check that the dates link up and notify the outgoing insurer of known circumstances.
Which coverage basis suits me? It depends on the timing profile of the damage. Where damage manifests immediately, the occurrence basis works without friction. Where it manifests late — professional indemnity, products, gradual pollution, directors' and officers' liability — it forces you to determine which historic policy responds, and the market works predominantly on a claims-made basis. What is decisive is not the basis but the continuity between successive policies.
Sources and legislation
- Law 50/1980 of 8 October, the Spanish Insurance Contract Act: article 73, first and second paragraphs (liability insurance and temporal delimitation of cover); article 3 (limiting clauses); article 4 (nullity where the loss had already occurred); article 2 (mandatory character); article 44, second paragraph (large risks).
- Law 30/1995 on the organisation and supervision of private insurance, which introduced the second paragraph of article 73 of Law 50/1980.
- Law 20/2015 on the organisation, supervision and solvency of insurance and reinsurance undertakings, article 11 (definition of large risks).
- Spanish Supreme Court judgment (First Chamber, Full Court) 252/2018 of 26 April, appeal 2681/2015: article 73, second paragraph, regulates two different limiting clauses with non-cumulative requirements.
- Spanish Supreme Court judgment (First Chamber) 545/2020 of 20 October: in large risks, claims-made clauses are validly incorporated without the formalities of article 3 and are enforceable against third parties.
- Split of the liability class: according to ICEA figures reported by the trade press (2026).
This information is for guidance only and does not constitute binding advice. Cover, limits and exclusions are governed in all cases by the particular conditions of each policy. New Brokers Correduría de Seguros, S.L., registered with the Spanish DGSFP under reference J0140.
