Which statement best describes the difference between 'claims-made' and 'occurrence' liability insurance?

Which statement best describes the difference between 'claims-made' and 'occurrence' liability insurance?

• A. Unlike claims-made coverage, occurrence insurance covers claims made after the policy expires
• B. Claims-made coverage covers claims made during the policy period
• C. Occurrence coverage requires continuous renewal to be effective
• D. Unlike occurrence coverage, claims-made protection applies after the policy ends

Answer: (D)

The difference hinges on when the coverage is triggered: in a claims-made policy, protection is activated by the claim being made during the policy period (and reported within any extended reporting period); in an occurrence policy, protection is activated by the event itself occurring during the policy period, regardless of when the claim is filed. This means that with claims-made coverage, you generally need to keep the policy active (or have tail coverage) to protect against claims filed after the policy ends. If the policy lapses and you don’t have extended reporting options, new claims that arise after expiration aren’t covered. With an occurrence policy, an incident that happens during the policy period can be claimed years later, even after the policy has ended, as long as the event occurred while the policy was in force. So the statement that claims-made protection applies after the policy ends isn’t accurate without tail coverage, because active claims-made protection is tied to claims filed during the policy period. Tail coverage is what allows extending protection after the policy ends.

The difference hinges on when the coverage is triggered: in a claims-made policy, protection is activated by the claim being made during the policy period (and reported within any extended reporting period); in an occurrence policy, protection is activated by the event itself occurring during the policy period, regardless of when the claim is filed.

This means that with claims-made coverage, you generally need to keep the policy active (or have tail coverage) to protect against claims filed after the policy ends. If the policy lapses and you don’t have extended reporting options, new claims that arise after expiration aren’t covered. With an occurrence policy, an incident that happens during the policy period can be claimed years later, even after the policy has ended, as long as the event occurred while the policy was in force.

So the statement that claims-made protection applies after the policy ends isn’t accurate without tail coverage, because active claims-made protection is tied to claims filed during the policy period. Tail coverage is what allows extending protection after the policy ends.