Insurance Law Lesson 87: Occurrence v Claims Made Coverage

Most general liability policies, whether personal (like in a homeowner’s policy or personal umbrella (See Lesson 27, Umbrellas)) or commercial are “occurrence based.” This means that the coverage is triggered by the occurrence (Lessons 20 and 21) that gives rise to the claim. There are differing approaches to determining when exactly the “occurrence” takes place. This is important because policies change over time (See Lesson 7).

Not all liability insurance is occurrence based. Professional liability policies are typically “claims-made.” These policies are triggered not by when the injury happened, but by when a claim (usually meaning a demand for monetary compensation) is first made against the policyholder.

If the claim is first made with the filing of a lawsuit, it is easy to pinpoint the date claim was made (it will be the date the policyholder received the lawsuit). Frequently, though, there will have been pre-suit communications. In those cases, it may be more difficult to determine when was the first time the policyholder received a demand.

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