Claims Occurrence Basis Liability Coverage

What Does Claims Occurrence Basis Liability Coverage Mean?

Occurrence-based liability coverage is a type of liability insurance that provides financial reimbursement for any covered claim arising from an event that occurs during the policy period. It will also cover claims made after the policy has been canceled, as long as the claim is filed for an event that took place during the active policy period.

Most standard general liability insurance policies for small businesses are written on an occurrence basis, which is why a claim tied to a slip-and-fall that happened three years ago can still be paid under the policy that was active when the incident took place.

Insuranceopedia Explains Claims Occurrence Basis Liability Coverage

Occurrence-based liability coverage is an alternative to claims-made liability coverage. With claims-made coverage, only claims for events that occur and are filed during the policy period are covered. In contrast, occurrence-based coverage will reimburse claims for events that happened during the policy period, even if the claim is filed after the policy has expired.

Claims-made policies are common in professional liability insurance, where lawsuits can surface years after a piece of work was delivered and insurers want to cap their exposure to the current policy term.

The key difference between the two types of coverage is that, with claims-made coverage, you must file the claim within the policy period to receive reimbursement. With occurrence-based coverage, you can file after the policy period, making it generally more desirable, all other factors being equal.