Understanding Claims-Made vs. Occurrence Policies


There are different types of insurance policies that businesses need to be familiar with. Two common types of commercial liability insurance policies are claims-made and occurrence policies. Here, we will explain the two types to help you choose the right coverage for your business needs.

What Is a Claims-Made Policy?

This type of policy provides coverage for claims made and reported to the insurance provider within the policy period. This means the claim must be made and reported within the same policy period for coverage to apply. If a claim is made after the policy expires, it will not be covered.

Claims-made policies often come with a retroactive date, the earliest date the policy covers claims. Any claims made before this retroactive date are not covered. Businesses must renew their claims-made policy each year to maintain continuous coverage.

One advantage of claims-made policies is that they typically have lower premiums initially. However, as the policy continues to be renewed, the premiums may increase over time.

What Is an Occurrence Policy?

In contrast, an occurrence policy provides coverage for claims arising from incidents during the policy period, regardless of when the claim is made or reported. This means that even if a claim is made years after the policy has expired, it will still be covered as long as the incident occurred during the policy period.

Occurrence policies are often more expensive initially compared to claims-made policies. However, businesses do not need to renew occurrence policies to maintain coverage for past incidents continually. This makes occurrence policies more predictable in terms of costs.


Claims-Made vs. Occurrence Differences

The main difference between claims-made and occurrence policies is when coverage is triggered. Claims-made policies require both the claim and the reporting of the claim within the same policy period. In contrast, occurrence policies only require that the incident occurs during the policy period.

Claims-made policies are typically used for professional liability insurance, such as errors and omissions (E&O) or malpractice insurance. These policies are often suited for professions where claims may arise long after the incident, such as medical professionals or consultants.

On the other hand, occurrence policies are commonly used for general liability insurance, which covers bodily injury and property damage claims. This type of coverage is often preferred for businesses that face potential long-term liabilities associated with past activities or products.

Work with Pronto Insurance 

At Pronto Insurance, we understand that commercial liability insurance policies can be difficult to comprehend. That’s why we have a team of experts here to help you navigate the world of claims-made and occurrence policies in California. We will ensure you have the right coverage for your business so you can focus on running your business with peace of mind.

Contact us today to discuss your insurance needs. Let us provide you with a tailored solution that aligns with your risk profile and budget. 

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