Claims-Made vs. Occurrence

These two terms describe the trigger that determines whether a liability or professional policy covers a specific claim. They produce policies that look identical on the surface but work in completely different ways when a real claim arrives years after the underlying event occurred.

An occurrence policy covers events that happen during the policy period, regardless of when the claim is filed. If you had an occurrence policy in 2020 and a client sues you in 2025 over work you did in 2020, your 2020 policy responds -- even if that policy has long since expired. Coverage follows the event, not the reporting date, which makes occurrence policies simpler to manage over time.

A claims-made policy covers claims that are reported while the policy is active, not just events that occurred while it was active. If you let a claims-made professional liability policy lapse, any claim reported after the expiration date -- even for work done years earlier -- has no coverage. The solution is tail coverage (also called an extended reporting period), which extends the window in which claims can be reported after the policy ends. Tail is essential when you retire, switch carriers, or dissolve a business that held a claims-made policy.

Most professional liability, errors and omissions, and directors and officers policies are written on a claims-made basis. General liability and most commercial property policies are occurrence-based. Knowing which trigger structure your policy uses is not a technicality -- it can be the difference between a covered $500,000 settlement and a personally devastating uninsured loss that no one warned you about.