Insurance glossary · How policies work
occurrence vs claims-made.
An occurrence policy covers incidents that happen while it’s active, whenever the claim arrives. A claims-made policy covers claims made while it’s active, which is why switching needs care.
What’s the difference between an occurrence and a claims-made policy?
An occurrence policy covers injury or damage that happens while the policy is in force, no matter when the claim is made. A claims-made policy covers claims first made while the policy is in force, as long as the event happened after the retroactive date. The difference shows up when you switch insurers, close, or sell.
Which kinds of insurance are usually occurrence and which are claims-made?
General liability, commercial auto and umbrella are usually occurrence. Professional liability, directors and officers, employment practices, cyber and pollution are usually claims-made. Some general liability policies, especially for larger or harder-to-place risks, are claims-made too.
What is a retroactive date?
It’s the earliest date an event can happen and still be covered by a claims-made policy. Keep the same retroactive date as you renew or switch insurers and you keep coverage for past work. Lose it, and claims about anything before the new date aren’t covered.
What is tail coverage?
Tail coverage, or an extended reporting period, lets you report claims after a claims-made policy ends, for events that happened while it was in force. It matters when you close, sell, retire or move to a policy that won’t keep your retroactive date.
What is prior acts coverage?
Prior acts coverage is what a new claims-made insurer gives when it keeps your old retroactive date. It’s the other way to avoid a gap when you switch: instead of buying tail from the old insurer, the new one covers the past.
What happens if I switch from claims-made to occurrence?
The new occurrence policy covers events from its start date forward, and your old claims-made policy stops taking new claims when it ends. Claims about events in between come in to nobody unless you buy tail on the old policy. That gap is the most common reason claims-made changes need care.
Why does it matter when a claim is reported on a claims-made policy?
Because the claim has to be made, and usually reported to the insurer, within the policy period or any reporting window it allows. A claim reported late can be denied even if it would otherwise be covered, so letters from lawyers and demand notices should go to your broker right away.
Is occurrence always better than claims-made?
Not always. Claims-made usually costs less in the first years and is the standard form for professional and management liability. Occurrence is simpler to keep continuous. Which fits depends on the coverage, what your contracts require, and how long claims tend to take to show up.
Does occurrence vs claims-made work differently by state?
The forms are mostly the same, but some states regulate claims-made policies. New York and North Carolina require insurers to offer tail coverage on set terms, Texas requires a bold claims-made notice and an automatic reporting window, and Arizona courts enforce reporting deadlines strictly. The notes below cover Riza’s licensed states.
in the states where Riza is licensed.
Riza is a licensed insurance agency in New York, Colorado, Texas, Florida, Massachusetts, Arizona, Nevada, North Carolina, New Jersey and Georgia. Notes below cite the law they come from. Detailed write-ups cover Arizona, Nevada, Texas, North Carolina and New York. One-line notes for other licensed states appear with them when this term has one.
- ArizonaArizona has no statute or insurance rule on claims-made disclosures or tail coverage for business liability policies. Its courts enforce claims-made-and-reported terms as written: a claim not made and reported within the policy period isn’t covered, and the insurer doesn’t have to show it was harmed by the late report.Sletten v. St. Paul Fire & Marine Ins. Co. (Ariz. App. 1989)contractors in Arizona →
- NevadaNevada’s claims-made statutes apply only to medical professional liability, where insurers must offer a tail and disclose its price. There’s no general claims-made rule for business liability, and whether Nevada’s late-notice rule applies to claims-made reporting deadlines hasn’t been settled.NRS ch. 690B · Las Vegas Metro. Police Dep’t v. Coregis Ins. Co. (Nev. 2011)contractors in Nevada →
- TexasTexas requires claims-made liability policies to say so in bold on the first page, to include a short automatic reporting window after the policy ends, and to offer a longer tail for purchase. The Texas Supreme Court has held that when a claim is reported within the policy’s reporting period, the insurer must show it was harmed before denying for slow notice.TDI, review requirements checklist: commercial general liability · Prodigy Commc’ns Corp. v. Agric. Excess & Surplus Ins. Co. (Tex. 2009)contractors in Texas →
- North CarolinaNorth Carolina gives general liability and professional liability insureds a set window after cancellation or nonrenewal to buy a tail with the full expiring aggregate limit, and requires insurers to provide loss history on request. State guidelines also require a bold claims-made notice and bar moving the retroactive date forward without the insured’s written consent.N.C.G.S. § 58-40-140 · NCDOI, guidelines for claims-made policiescontractors in North Carolina →
- New YorkNew York has the most detailed claims-made rules of these states. Claims-made policies must include an automatic reporting window, insurers must offer a longer tail priced at the rates in effect when the policy was written, the retroactive date can’t change during the relationship, and the policy must carry required disclosures. A claims-made policy can still require the claim to be made within the policy period or tail.11 NYCRR § 73.3 · 11 NYCRR § 73.7 · N.Y. Ins. Law § 3420contractors in New York →
by trade.
- General contractorsYour general liability is usually occurrence, but contractors pollution and professional liability for design-build work are often claims-made, so their retroactive dates matter when you switch.
- PlumbingPollution coverage for plumbing and septic work is often claims-made, which makes the retroactive date worth checking at every renewal.
- HVACMold and pollution coverage for HVAC work is commonly claims-made, even when general liability is occurrence.
where you’ll see it.
- Policy declarationsA “retroactive date” or “retro date” field on a claims-made policy.
- Policy titles“Claims-made and reported” or “occurrence” in the coverage form name.
- ContractsRequirements that claims-made coverage be kept for a set number of years after the project, or that tail be purchased.
- Deal documentsPurchase agreements that require the seller to buy tail on management liability.
keep the retro date when you switch.
When Riza moves a claims-made policy, we match the retroactive date or price the tail before the old policy ends, so no claim falls between the two. One broker across your policies means no one switches one coverage without checking what it does to the rest.
Get a quoterelated terms.
Coverage it touches: General liability · D&O and employment practices