⚖️ Claims-Made vs. Occurrence Coverage
A foundational P&C concept that shapes how liability policies respond to loss.
📌 Why This Distinction Matters
The difference between claims-made and occurrence coverage is one of the most important concepts in liability insurance. It affects how policies respond, how premiums are calculated, and how producers advise clients. Misunderstanding this distinction can lead to coverage gaps and costly disputes.
🏛️ Occurrence Coverage
Definition: A policy that responds to losses caused by events that occur during the policy period, regardless of when the claim is reported.
- Common in General Liability, Homeowners, Auto
- Simple trigger: Did the event happen during the policy period?
- Long-tail exposures remain open for years
🕒 Claims-Made Coverage
Definition: A policy that responds to claims reported during the policy period, as long as the event occurred after the retroactive date.
- Common in Professional Liability, D&O, E&O, Cyber
- Key features: retroactive date, extended reporting period (tail)
- Pricing reflects reporting patterns, not just events
📊 Side-by-Side Comparison
- Trigger: Occurrence = event; Claims-made = report
- Long-tail risk: Higher for occurrence
- Premium stability: Higher for claims-made
- Common lines: GL vs. Professional Liability
