FAQ: Professional Liability - Claims-Made vs. Occurrence (2024)

FAQs

FAQ: Professional Liability - Claims-Made vs. Occurrence? ›

Claims-made coverage is portable. You can take the coverage from one insurance company to another. The advantage to an occurrence policy is its permanence. The period of time you are insured under an occurrence policy is protected forever by the policy you had that year.

For example, general liability insurance is mostly available as an occurrence policy, while professional liability insurance, errors and omissions (E&O) insurance, and directors and officers (D&O) insurance mainly have claims-made coverage.

As far as some most common business insurance types are concerned, E&O (also called professional liability) and directors & officers policies tend to be claims-made while most general liability contracts fall into the occurrence category.

Occurrence malpractice insurance provides coverage for incidents that occurred during the policy year, regardless of when a claim is reported to the carrier. Claims-made malpractice insurance provides coverage if the policy is in effect both when the incident took place AND when the claim is filed.

The occurrence policy has the advantage of permanency. You do not have to renew the policy to maintain coverage for a year you were insured. You have separate limits each year you were insured so past claims will not erode the limits of future years of coverage.

An "occurrence"-based CGL policy is usually triggered when bodily injury (BI) or property damage (PD) takes place—even if the claim or suit for damages because of that BI or PD is not made for months or years later. Other CGL policies are written on a "claims-made" basis.

In insurance, an occurrence is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”

Most general liability insurance policies for businesses are occurrence based policies, while errors and omissions (E&O) coverage is typically claims made. There are a few simple but significant differences between these policies that you should understand.

E&O insurance doesn't cover claims for property damage, bodily injury, workplace injuries, data breaches, intellectual property violations, or criminal acts such as fraud.

Why is occurrence better than claims made? ›

A claims-made policy only covers those that occur and are reported within the policy's timeframe, unless tail coverage is also purchased. An occurrence policy provides lifetime coverage for incidents that take place during a policy period, regardless of when the claim is reported.

A “Claims Made” policy provides coverage for claims when the incident is reported. A “Claims Occurring” policy provides coverage for when the incident occurred. An example would be if there was fault in work that you carried out ten years ago, but it has only just been reported today.

The key difference between the two is in the mechanism the policy uses for activating coverage, that is, what needs to occur, and when, in order for a claim to be considered for coverage.

Claims-made coverage is portable. You can take the coverage from one insurance company to another. The advantage to an occurrence policy is its permanence. The period of time you are insured under an occurrence policy is protected forever by the policy you had that year.

No, you don't need tail coverage if you have an occurrence policy. That's because you'll get coverage for a claim if the incident occurred during the policy period – even if you're reporting claims after your policy's expiration date.

Proving causation is often the most difficult element of a medical malpractice case. However, it is not impossible. With the help of an experienced medical malpractice lawyer, plaintiffs may be able to overcome the challenges of proving causation and win their cases.

An insurance policy on a 'Claims Occurring' basis meets claims that occur during the policy period irrespective of when the claim is made. The usual general liability insurances such as employers' liability, public liability and product liability are normally on a 'Claims Occurring' basis.

Professional indemnity cover is usually offered on a claims-made basis. This means that your insurer will only cover you for claims that are brought against you during the term of your policy.

Most EPLI policies are “claims-made,” meaning that the policy must be in effect both when the event took place and when a lawsuit is filed for a claim to be paid. The only time this isn't the case is if the policy has a retroactive date, which allows coverage for an incident prior to the start of the policy.

It is fair to say that the majority of policies in the professional and management liability fields operate on a “claims-made” basis.