You are correct, those are some of the advantages of claims-made vs. occurrence policies. Claims-made policies started because the industry went through a crisis in the 60's and 70's.
>Buying a policy to file a claim for an event that already happened is called fraud, and while it does happen, it's generally pretty easy for insurers to detect and prevent.
Detection has underwriting costs associated with it. Investigating whether you knowingly purchased an insurance policy with an incoming claim is not something that is automated. By default a claims made policy will prevent the issue in the first place by resetting what is known as the retroactive date. This causes the lapse in coverage the OP was referring to.
There are specialty insurers who will allow you to explain extenuating circumstances, and/or set retroactive dates prior to the effective date of the first claims-made policy. You obviously pay for the additional risk this poses to the insurer though.
>Buying a policy to file a claim for an event that already happened is called fraud, and while it does happen, it's generally pretty easy for insurers to detect and prevent.
Detection has underwriting costs associated with it. Investigating whether you knowingly purchased an insurance policy with an incoming claim is not something that is automated. By default a claims made policy will prevent the issue in the first place by resetting what is known as the retroactive date. This causes the lapse in coverage the OP was referring to.
There are specialty insurers who will allow you to explain extenuating circumstances, and/or set retroactive dates prior to the effective date of the first claims-made policy. You obviously pay for the additional risk this poses to the insurer though.