Claims-Made vs. Occurrence

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

These two terms describe the trigger that determines whether a liability coverage 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.

How does an occurrence policy work?

An occurrence policy covers events that happen during the policy period, regardless of when the claim is filed. For example, 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. Most general liability and commercial property policies are written on an occurrence basis.

How does a claims-made policy work, and what is tail coverage?

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 coverage is essential when you retire, switch carriers, or dissolve a business that held a claims-made policy. For example, a physician who closes a practice without purchasing tail coverage could face a malpractice claim years later with no policy to respond, even though the alleged act occurred during the active policy period. Our guide on what professional liability insurance covers explains how claims-made triggers apply across different professions.

What is a retroactive date on a claims-made policy?

A related concept is the retroactive date, sometimes called the retro date: the date from which a claims-made policy will consider underlying events eligible for coverage. A claims-made policy with a retroactive date of January 1, 2022, will not cover a claim arising from work performed before that date, even if the claim is filed while the policy is active. When switching carriers, confirming the new policy carries the same retroactive date as the old one prevents a silent gap in coverage for older work. This is a common issue for Georgia small-business owners comparing policies, as discussed in our FAQ on BOP cost vs. separate policies in Georgia.

Which policy types use claims-made vs. occurrence triggers?

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. Claims-made policies also tend to cost less in early years because the exposure window is narrow, and premiums typically rise as that window widens. The long-term cost of tail coverage at policy end can offset early savings, particularly for Georgia small-business owners who close a practice or sell a business. Knowing which trigger structure your policy uses is not a technicality; it can be the difference between a covered settlement and an uninsured loss. See our FAQ on what a coverage review involves to understand how an advisor checks your trigger structure. A coverage review can confirm which trigger applies to each of your policies, whether your retroactive date is properly protected, and whether tail coverage makes sense for your situation.