What is the difference between an occurrence policy and a claims-made policy, and why does it matter in claims handling?

What is the difference between an occurrence policy and a claims-made policy, and why does it matter in claims handling?

• A. An occurrence policy covers incidents during the policy period.
• B. A claims-made policy covers incidents during the period.
• C. An occurrence policy covers claims filed during the period.
• D. Both are identical.

Answer: (A)

Coverage is determined by when the event happens, not when a claim is filed. An occurrence policy provides protection for incidents that occur during the policy period, regardless of when the claim is later made. This means a claim can come years after the incident and still be covered, as long as the incident happened while the policy was in force. In claims handling, this shifts the focus to the date the event occurred and the policy period that covered that date, creating potential long‑tail exposure and sometimes the need to check for any extended reporting options. By contrast, a claims-made policy hinges on when the claim is reported; coverage only applies if the claim is made during the policy period, with tail coverage used to address claims made after the policy ends. So the correct statement—the occurrence policy covers incidents during the policy period—best describes how coverage is triggered and why it matters in handling claims.

Coverage is determined by when the event happens, not when a claim is filed. An occurrence policy provides protection for incidents that occur during the policy period, regardless of when the claim is later made. This means a claim can come years after the incident and still be covered, as long as the incident happened while the policy was in force. In claims handling, this shifts the focus to the date the event occurred and the policy period that covered that date, creating potential long‑tail exposure and sometimes the need to check for any extended reporting options. By contrast, a claims-made policy hinges on when the claim is reported; coverage only applies if the claim is made during the policy period, with tail coverage used to address claims made after the policy ends. So the correct statement—the occurrence policy covers incidents during the policy period—best describes how coverage is triggered and why it matters in handling claims.