Claims-Made vs. Occurrence Policy
This is a structural distinction that applies mainly to liability policies like professional liability — an occurrence policy covers incidents that happened during the policy period regardless of when the claim is filed, while a claims-made policy only covers claims filed while the policy is active.
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Claims-Made Policy
Covers claims only if both the incident and the claim occur while the policy is active (or during an extended reporting period, if purchased), which requires careful attention if you ever switch insurers or cancel coverage.
- Often has a lower initial premium than a comparable occurrence policy
- Common and well-established structure for professional liability coverage specifically
- Requires maintaining continuous coverage, or purchasing 'tail' coverage, to protect against claims filed after the policy ends
- Coverage can lapse for a past incident if you switch insurers without proper tail coverage in place
Occurrence Policy
Covers any incident that occurred during the policy period, regardless of how much later the claim is actually filed, without needing continuous coverage or tail coverage.
- No need to worry about a coverage gap if you switch insurers or eventually close the business
- Simpler long-term protection since the policy period, not the claim filing date, is what matters
- Generally has a higher premium than a comparable claims-made policy
- Less commonly available for certain types of coverage, like professional liability
Which one makes sense for you?
Occurrence policies offer simpler, more durable long-term protection, since the coverage doesn't depend on maintaining continuous insurance or purchasing extended reporting coverage later. Claims-made policies are common, particularly for professional liability, and can be a reasonable and often lower-cost choice as long as you understand and plan for the tail coverage implications of ever switching insurers.
Key cost factors.
- Likelihood of switching insurers or canceling coverage in the future
- Whether your specific coverage type is even available on an occurrence basis
- Budget for the potentially higher occurrence policy premium
- Long-term plans for the business, including eventual closure or a change in ownership
Before you decide.
- If I have a claims-made policy, what would tail coverage cost if I switch insurers or close the business?
- Is an occurrence policy even available for the specific coverage I need?
- How does the premium difference between the two structures compare for my situation?
Frequently asked questions.
What is tail coverage?
It's an optional extended reporting period endorsement for a claims-made policy that allows claims based on incidents during the original policy period to still be filed and covered even after that policy has ended — without it, switching insurers or closing a claims-made policy can leave past incidents uncovered.
All figures on this page are illustrative examples for general education, not quotes, appraisals, or guarantees of actual pricing. Actual costs vary by provider, location, project scope, and market conditions — always get a specific quote before making a purchasing decision.
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