Policy Terms
Claims-Made vs Occurrence
Definition
Two types of liability insurance policy trigger mechanisms. An occurrence policy covers incidents that happen during the policy period, regardless of when the claim is later filed. A claims-made policy only covers claims that are both reported during the active policy period and that occurred after the policy's retroactive date. Claims-made policies require continuous coverage or a tail (extended reporting period) policy to maintain protection for past acts.
In Zach’s Words
“This is one of the most important — and most confusing — concepts in commercial insurance. An occurrence policy covers anything that happens while the policy is active, even if the claim comes years later. A claims-made policy only covers you if the incident AND the claim both happen while the policy is active. Why does this matter? If you switch carriers or let a claims-made policy lapse, you could lose coverage for past incidents. That's why 'tail coverage' exists — it extends your reporting window. Always ask your agent which type you have.”
— Zach Nadler, CIO