The term
"occurrence policy" refers to an insurance policy that covers claims based on when an incident or event occurred. This means that as long as the incident happened during the policy period, it will be covered, regardless of when the claim is actually made.
Full definition
The primary advantage
of occurrence policies is that they cover «long - tail» claims, meaning claims that arise many years after the policy has expired.
If Tasty Treats was insured
under occurrence policies, the claim would be covered by the policy that was in effect when the injury occurred.
First, premiums on
new occurrence policies skyrocketed, since the industry had learned the hard way to assume the worst as to those policies.
Many claims - made policies provide an automatic ERP if your insurer cancels or non-renews your policy, replaces it with
an occurrence policy, or advances the retroactive date.
A key advantage of
an occurrence policy is that it covers claims filed many years after the policy has expired.
The claim is not covered under
your occurrence policy either, since Ed's injury did not occur during the term of that policy.
This article will describe the key differences between claims - made and
occurrence policies.
An occurrence policy covers claims resulting from an injury or other event that occurs during the policy term.
Your occurrence policy runs from January 1, 2018 to January 1, 2019.
Coverage gaps may occur if you switch from a claims - made policy to
an occurrence policy.
Since the incident occurs within the policy period, it'll still be covered under
an occurrence policy even though it was reported after the policy's expiration date.
An occurrence policy is typically more expensive than claims - made policy because there isn't a limit on the time a claim must be reported.
The only difference between a claims - made and
occurrence policy is how their coverage is activated.
Under
an occurrence policy, coverage is triggered (initiated) by an injury that takes place during the policy period.
A typical general liability policy is
an occurrence policy.
This presents a problem to business owners who switch from a claims - made policy to
an occurrence policy, or who stop buying coverage altogether.
Here are some things to consider when choosing between
an occurrence policy and a claims - made policy:
Let's understand the difference between both of them — Coverage Starts In case of
an occurrence policy, the coverage starts the time an injury takes place during the policy term.
When your policy expires, your insurer replaces it with
an occurrence policy.
Although
an occurrence policy offers a permanent benefit, it's costly.
Occurrence Policy: Insurance that pays claims arising out of incidents that occur during the policy term, even if they are filed many years later.