What is the difference between claims-made and occurrence policies?

The difference between claims-made and occurrence policies is about timing: which dates have to line up for a claim to be covered. An occurrence policy covers an incident that happened while the policy was active, no matter when the claim is filed. A claims-made policy covers a claim only if both the incident and the claim filing happen while coverage is active. That timing difference matters most for liability coverage that can produce claims years after the work or event.

How does an occurrence policy trigger coverage?

With an occurrence policy, if the event happened during your policy period, you are covered, even if the claim arrives five years after that policy ended. The trigger is when the incident occurred, not when the claim is filed. This makes occurrence policies simpler to manage over time, since there is no need to maintain coverage after the policy period ends just to protect past work.

How does a claims-made policy trigger coverage?

With a claims-made policy, the claim must be reported while the policy (or a continuation of it) is in force, and the incident must have happened after a set retroactive date. The retroactive date is the earliest point in time from which the policy will cover incidents. If an incident happened before the retroactive date, the policy will not respond even if the claim is filed during the active period.

For example, a Georgia consultant with a claims-made professional liability policy finishes a project in 2024, cancels coverage in 2025, and a client sues in 2026 over that 2024 work. Because the policy was no longer active when the claim was filed, it would not respond, unless the consultant had bought tail coverage to extend the reporting window. With an occurrence policy, that same 2024 work would still be covered no matter when the claim came in.

What is tail coverage and when do you need it?

Tail coverage, also called an extended reporting period, lets you report claims after a claims-made policy ends for incidents that happened while coverage was active (see what a coverage review involves). It protects against the gap that opens when you cancel a claims-made policy or switch carriers. Without tail coverage, claims that arrive after cancellation for work done during the active period may have no coverage at all.

For example, a Georgia architect who retires and cancels her professional liability policy in 2025 could still face a claim in 2028 for work completed in 2023. Tail coverage purchased at cancellation would allow that 2028 claim to be reported under the expired policy, while going without it leaves that exposure entirely uninsured.

Are claims-made or occurrence policies more common for professional liability?

Claims-made policies are common for professional liability and some general liability because they let insurers price long-tail risk (see what is professional liability insurance). They are often cheaper early on, but you must keep continuous coverage or buy tail coverage when you stop, or a gap can leave you exposed. Occurrence policies are simpler and avoid that gap, but can cost more.

What should you check before canceling or switching a liability policy?

Understanding which type you have is essential before you cancel or switch carriers (see other commercial insurance needs in Georgia). Request a free coverage review and we will confirm how your liability policy is written and whether you need tail coverage.