The Different Types of Business Insurance Coverage: Claims-Made vs. Occurrence

When it comes to most insurance policies, there are two main types of coverage: Claims-Made and Occurrence. Both have their own advantages and disadvantages so its important to understand the differences before choosing an insurance policy.
Claims-Made insurance coverage covers claims that are made during the policy period. This type of coverage is typically used for liability purposes. For example, if you have a claims-made policy for your business, it will only cover claims that are made while the policy is active. Once the policy expires or is cancelled, any claims made will NOT be covered.
One advantage of claims-made insurance coverage is that its generally less expensive than occurrence coverage since the insurance company is only on the hook for claims that are made while the policy is active. The insurance company doesn't have to worry about historical (past) claims that might come back to haunt them!
Occurrence insurance coverage covers claims that occur during the policy period, even if the claim isn't filed until after the policy expires or years later. So for example, if you have an occurrence policy for your business, it will likely cover any damages or injuries that occur during the policy period-even if the claim isn't filed until years later. Just as long as the injury or damage happened while the policy was actually active.
Occurrence coverage does offer broader protection and as a result do tend to cost more than claims-made policies.
There is no right or wrong answer when it comes to choosing between these two types of insurance coverages-it really all depends on your specific needs, preference and budget. Working with a knowledgeable insurance agent can help you determine which option works best for your specific situation.
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