Not knowing the difference between “Claims-made” vs. “Occurrence” insurance policies can be a costly mistake.

It is important to understand the difference between the two most common types of professional liability insurance plans - “Claims-made” and “Occurrence”.

Under a “claims-made” policy, the policy covers claims made against you only while the policy is in effect. The down side of this type of policy is that coverage must be continued indefinitely to assure coverage for claims filed in the future for actions that occurred in the past. Essentially, once the policy has lapsed you no longer have coverage.

Under the “occurrence” policy, you are covered for alleged acts of negligence that occurred while the policy was in effect. It does not matter if the coverage is in effect at the time the claim is made. The benefit of occurrence coverage is that even if you cancel your policy at some future date, you will still have coverage for events that occurred while the policy was in effect.