Claims-made versus Occurrence - The simplified version!

Often in this amazing industry of insurance you are bombarded with acronyms galore, 100+ page policies, and those who claim to be "industry experts". Through all of the smoke and mirrors, it can be extremely difficult to see through the fog and really understand the biggest question companies have, "Am I covered?"

My manager often reminds us that we do not truly understand a topic, even if it makes sense in our own heads. Rather, you can only become a master of something if you can properly explain and teach it to someone else. When speaking about Claims-made versus Occurrence coverage triggers, most agents will tell you that explaining it is easier said than done. This is my valiant attempt to make this as digestible as possible, while still trying to answer that coveted "Am I covered?" question (you may not like my response though!).

Some brief history first. Claims-made coverage is essentially an infant compared to how long Occurrence coverage has been around. As risks became more complex, there became a need for a different coverage trigger in the marketplace. (Coverage trigger?... What's that?) Right, sorry. A coverage trigger means almost exactly as it looks, it is the event that triggers coverage to kick into action.

Now for the fun stuff! When it comes to coverage triggers, Occurrence is what most of us are used to. An Occurrence coverage form means that whoever is providing the insurance (the insurance carrier) when the accident or claim occurred would be the one to handle the claim.

The Claims-made trigger is slightly different (and by slightly, I mean in a HUGE way). Claims-made forms become triggered when a claim is actually submitted, or a lawsuit is filed. (But Dylan, I thought you said it was different in a HUGE way?) Correct, that is because the insurance carrier who will cover the newly filed claim is the carrier that is currently on the policy when the claim is filed.

Did I lose you? Ok, how about an example?

Humpty-dumpty is a contractor working on ... well... a wall. And as you may have guessed, Humpty-dumpty fell off said wall. He did not think it affected him too much and waited about a year before he realized the pain wasn't going away and he filed a claim. Below is a timeline.

In this case, if the policy was written on an Occurrence form, the carrier providing coverage during the August 2019 policy period would be handling the claim. If the policy was written on a Claims-made form, the carrier providing coverage during the August 2020 policy period would be fronting the bill.

So to answer that oh-so important "Am I covered" question, the answer is (drum roll please) It depends! Not the best answer I know but there is a time and place for each coverage type and that would require a much deeper conversation. I am glad to have it with you! Just message me on LinkedIn, give me a call (610-509-0334) or send me an email ([email protected]) and we can chat more.

I look forward to speaking with you!

About the author

Dylan Jordan is a Business Insurance Consultant at USI Insurance Services who focuses on Nonprofit and Healthcare companies. In his short time in the industry, he has amassed a whopping 7 designations including the CPCU, RPLU, ARe and more! Dylan's primary goal is to help his clients further their dreams and missions by lowering premiums and mitigating risks. He graduated from Gwynedd Mercy University Summa Cum Laude and spends his free time with his one (soon-to-be-two!) children and wife.