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The Difference Between Occurrence and Claims Made Policies

The Difference Between Occurrence and Claims Made Policies

The following table highlights the differences between Occurrence and Claims Made Policies.

CLAIMS-MADE CONTRACTS 

OCCURRENCE CONTRACTS 

Claims-made coverage is operative only if a claim is made in the policy period and provides indemnity for claims that occurred during or prior to the period of insurance up to the retroactive date of the policy (and the insured had no prior knowledge of the incident/circumstance prior to the period of insurance).  

In a Claims Made contract, the policy must be in force:
  • on the date you become aware of a claim or potential claim, and
  • when you inform the insurer of a claim or potential claim.

The act, error, or omission that causes the loss can occur at any time:
  • before or during the policy period, and
  • on or after the retroactive date.
Occurrence-based coverage is triggered by an occurrence or event during the period of insurance, irrespective of the date the claim was made. 

In an Occurrence contract, the policy must be in force:

  • on the date the event that causes the loss occurs.

Notification can be given to the insurer:

  • at any time, subject to the policy notification clause, which may define a limited period to notify. 

Changing from a Claims Made Policy to an Occurrence Policy


The occurrence policy wording will not cover claims made that relate to incidents outside the policy period.

 If changing from a claims made policy to an occurrence policy, the policyholder will need to purchase Run-off Cover to provide protection for their business activities prior to the inception of the ‘occurrence policy’ or negotiate prior cover with their new insurer rather than purchasing Run-off Cover.

Changing from an Occurrence Policy to a Claims Made Policy


If the policyholder moves from an occurrence-based policy to a claims-made policy, there are no issues. As incidents that occurred during the policy period are covered (subject to the terms of the cover), there is no consideration for the expiring occurrence wording.

Changing Policy Cover from one Insurer to Another


For claims made policies, it is important to negotiate both full retroactive cover and a continuous cover endorsement with the new insurer.

Changing Policy Cover from one Insurer to Another


For occurrence policies, there are no issues with the occurrence wording. 

Types of Claims Made Policies


The following types of insurance are commonly termed "Claims Made" contracts of insurance: 
  •  Professional Indemnity Insurance 
  • Directors and Officers Liability Insurance 
  • Management Liability Insurance 
  • Employment Practices Liability Insurance 
  • Fidelity Insurance

Types of Occurrence Policies


The following types of insurance are commonly termed "Occurrence" contracts of insurance: 
  •  Public and Products Liability Insurance 
  • Business Property Insurance
  • Motor Vehicle Insurance 
Disclaimer – “This material contains general information only and may not suit your particular circumstances. To decide if a policy is right for you, please carefully read the relevant Product Disclosure Statement (PDS) and/or Policy wording. While we have exercised due care and skill in preparing this information, Optimum Insurance Services (Optimum) does not accept any legal responsibility or liability for negligence or otherwise to you or anyone else who seeks to rely on this information. This includes, without limitation, loss arising from a possible failure of the information to comply with statutory or regulatory requirements or the failure of the information to identify other terms and conditions beyond those considered in this document. You should obtain advice to ensure that your policy provides adequate cover for your circumstances. “Optimum Insurance Services Pty Ltd is a Corporate Authorised Representative of Insurance Advisernet Australia Pty Ltd (Car No. 291220), Australian Financial Services Licence No 240549, ABN 15 003 886 687.”