The following table highlights the differences between Occurrence and Claims Made Policies.
CLAIMS MADE CONTRACTS |
OCCURRENCE CONTRACTS |
Claims made coverage is operative only if a claim is made in the policy period and provides indemnity for claims that occurred during or prior to the period of insurance up to the retroactive date of the policy (and the insured had no prior knowledge of the incident/circumstance prior to the period of insurance). In a Claims Made contract the policy must be in force:
The act, error or omission that causes the loss can occur at any time:
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Occurrence based coverage is triggered by an occurrence or event during the period of insurance, irrespective of the date the claim was made.
In an Occurrence contract, the policy must be in force:
Notification can be given to the insurer:
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Changing from a Claims Made Policy to an Occurrence PolicyThe occurrence policy wording will not cover claims made that relate to incidents outside the policy period.
If changing from a claims made policy to an occurrence policy, the policyholder will need to purchase Run off Cover to provide protection for their business activities prior to the inception of the ‘occurrence policy’ or negotiate prior cover with their new insurer rather than purchasing Run off Cover.
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Changing from an Occurrence Policy to a Claims Made PolicyIf the policyholder moves from an occurrence based policy to claims made policy, there are no issues. As incidents that occurred during the policy period are covered (subject to the terms of the cover), there is no consideration for the expiring occurrence wording.
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Changing Policy Cover from one Insurer to AnotherFor claims made policies, it is important to negotiate both full retroactive cover and a continuous cover endorsement with the new insurer.
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Changing Policy Cover from one Insurer to AnotherFor occurrence policies, there are no issues to the occurrence wording.
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Types of Claims Made PoliciesThe following types of insurance are commonly termed "Claims Made" contracts of insurance:
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Types of Occurrence PoliciesThe following types of insurance are commonly termed "Occurrence" contracts of insurance:
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