Occurrence Basis

Updated: 29 February 2024

What Does Occurrence Basis Mean?

Occurrence basis is a sub-type of commercial liability insurance. An occurrence basis policy is one that covers the insured for liability related to events that occurred during the policy period, even if the claim itself is only filed after the policy period has expired.

Insuranceopedia Explains Occurrence Basis

An occurrence basis policy is one of two types of commercial liability insurance. The other is a claims-made policy. For a claims-made policy to pay the insured, both the incident leading to the insured event (such as a lawsuit) and the filing of the claim must take place during the policy period.

A policy that works on an occurrence basis, on the other hand, will pay even if the claim is filed years after the policy is no longer in force. It only requires that the incident that triggered the lawsuit or other liability damage took place during the policy period.

For example, if a business has an occurrence basis liability insurance policy in force from January 18, 2018 to January 18, 2019, they will be covered for liability for events that took place during that period. If the policyholder chooses not to renew their policy in 2019 and they face a lawsuit in February 2020 for an incident that took place in November of 2018, the insurer will still honor their coverage despite the claim being filed when the policy is no longer in force.

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