The differences can exist in personal insurance, but when applied to commercial coverage, especially general and professional liability, the contrasts are distinct and often costly.
Ever heard of these terms? If you are a typical consumer, probably not. The differences can exist in personal insurance, but when applied to commercial coverage, especially general and professional liability, the contrasts are distinct and often costly.
The International Risk Management Institute (IRMI) cites occurrence as a policy covering claims that arise out of damage or injury that took place during the policy period, regardless of when claims are made. These types of policies are generally more expensive, but are advantageous to consumers, companies, and professionals that benefit from long-term exposure.
This varies from claims made policies which cover claims, first made, reported or filed, during the year the policy is in force. Claims-made policies are unfavorable because it is sometimes difficult to report claims during the year the policy is in force.
For example, if a contractor builds a home or office building, he should take out an occurrence policy rather than claims made policy.
Why? Problems with construction often surface well into the future. The Occurrence policy would be based on the date of construction. Any claim brought during the policy period or well beyond that as a result of the project should be covered. A claims made policy may not cover claims that are brought in the future.
It is always best to consult your independent insurance agent regarding specifics to your individual policy. These licensed professionals are qualified to help you make the right choices and clarify any confusion.
“The information on this site is general in nature. Any description of coverage is necessarily simplified. Whether a particular loss is covered depends on the specific facts and the provisions, exclusions and limits of the actual policy. Nothing on this site alters the terms or conditions of any policies, nor does it provide any guarantees. You should read your specific policy for a complete description of coverage.”