Occurrence Policy
Plain English
An occurrence policy looks at when the incident happened. If it happened while the policy was active, it can be covered even if the lawsuit comes years later, after you've dropped the policy. That's the main difference from a claims-made policy, which generally must be active when the claim is made too.
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On this page
Definition
An occurrence policy covers claims for events that happened during the policy period, even if the claim or lawsuit is filed after the policy has ended. It's the counterpart to a claims-made policy, which generally must be in force both when the event happened and when the claim is made.
Why It Matters
Lawsuits often arrive long after the work or the injury. The type of policy decides whether a late claim gets paid, which matters when you retire, close a business or switch insurers.
Real-World Example
Imagine a contractor had an occurrence liability policy in 2024 and switched insurers in 2025. In 2026, a client sues over damage from work done in 2024. Because the work happened during the 2024 policy period, the 2024 occurrence policy would generally respond, even though it ended, subject to its terms and limits.
Common Misconceptions
- Assuming all liability policies treat late claims the same way.
- Dropping a claims-made policy without understanding what that means for later claims.
Key Takeaways
- The Insurance Information Institute: occurrence policies "cover any claim for an event that took place during the period of coverage—even if the suit is filed after the policy lapses."
- Claims-made policies require the policy to be in effect "both when the event took place and when a lawsuit is filed," per the same source.
- Most professional liability policies are claims-made, the Institute notes; general liability is often written on an occurrence basis.
Frequently Asked Questions
Which is better, occurrence or claims-made?
Neither in general; they handle timing differently. Occurrence coverage avoids the gap when you change or drop policies.
What's it commonly confused with?
Claims-made coverage, which depends on when the claim is made, not only when the event happened.
Related Terms
Related Coverages
- General Liability Insurance
Related Scenarios
Explore the rest of the Business Insurance category.
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The factual claims on this page were checked against these sources. Rules and figures change, so check the source itself if you need to confirm the current version.
- iii.orgProfessional liability insurance · Insurance Information Institute (Triple-I)
Educational information, not advice: This page is for general education only, not legal, financial, or insurance advice. Actual coverage, discounts, and requirements depend on your policy’s wording, your insurer, and the laws of your state. Confirm specifics with your own insurer or a licensed agent before making a decision. Insurpedia does not sell insurance and does not recommend specific insurers.