What is the difference between a claims made and an occurrence based cover?

Claims-made coverage and occurrence-based coverage are two different types of liability insurance policies that provide coverage for different time periods and under different circumstances.

A claims-made policy covers claims that are made against the insured during the policy period, regardless of when the underlying incident occurred. This means that the policy will only cover claims that are made while the policy is in effect, regardless of when the incident took place. This type of policy usually has a retroactive date, which specifies the earliest date when a claim can be made for an incident.

In contrast, an occurrence-based policy covers incidents that occur during the policy period, regardless of when a claim is made. This means that the policy will cover any claims that arise from incidents that occurred while the policy was in effect, even if the claim is made years later. Occurrence-based policies do not have a retroactive date, as coverage is determined by when the incident occurred.

The main difference between claims-made and occurrence-based policies is how they determine when coverage applies. Claims-made policies cover claims made during the policy period, while occurrence-based policies cover incidents that occur during the policy period, regardless of when the claim is made.

It is important to note that claims-made policies typically have lower premiums than occurrence-based policies, as they provide coverage for a shorter period of time. However, claims-made policies may require the purchase of extended reporting period (ERP) coverage or tail coverage in order to cover claims made after the policy has expired or been cancelled. Occurrence-based policies do not require these additional coverages.

Subscribe now
Read More

More Articles

How to become a business rescue practitioner in South Africa

Embarking on the journey to become a Business Rescue Practitioner (BRP) in South Africa is a pathway filled with challenges, but also immense opportunities to make a significant impact in the corporate landscape. As the country navigates through economic fluctuations and business uncertainties, the role of a BRP has become increasingly vital. This article serves…

Read Article > about How to become a business rescue practitioner in South Africa
Can I Get Retroactive Coverage With Professional Indemnity Insurance?

Short Answer: Yes, you can get retroactive cover. It’s important to note that various insurers may have distinct criteria or prerequisites concerning retroactive cover and dates. You should canvass this with your broker prior to taking out a PI policy. Retroactive cover is an important aspect of Professional Indemnity (PI) insurance. This type of cover…

Read Article > about Can I Get Retroactive Coverage With Professional Indemnity Insurance?
Which Professions Require Professional Indemnity Insurance?

While this list is not exhaustive, here are some professions in South Africa that commonly require PI insurance: It is important to note that the requirement for PI insurance may vary based on regulatory bodies, professional associations, contractual obligations, and client demands within each profession. Professionals in these fields should consult with their respective industry…

Read Article > about Which Professions Require Professional Indemnity Insurance?