Occurrence policy
Also called Occurrence form or occurrence-based coverage
Definition
An occurrence policy covers injury or damage that happens during the policy period, even if the claim is filed after the policy has ended.
An occurrence policy is triggered by when something happens, not when someone complains about it. If a customer is hurt during your policy period, that policy responds to the claim, whether it arrives next week or years later, and whether or not you still carry it.
How it works
Two dates matter in any liability claim: when the injury or damage occurred, and when the claim was made. An occurrence policy looks at the first. The claim goes to the policy that was in force on the date of the injury or damage, and that policy’s limits apply.
Most general liability policies are written on an occurrence basis. Professional liability is usually written the other way, as a claims-made policy, which covers claims made during the policy period for work done after a retroactive date.
Why it matters for a small business
- Switching insurers is simpler. Each year’s policy keeps covering events from its own year, so you don’t need an extended reporting period when you switch or close the business.
- Old policies still matter. Keep copies of past policies, or at least their declarations pages. A late claim goes to the policy in force when the injury happened, which may be with a former insurer.
- Gradual damage is harder to date. When harm builds slowly, like a hidden leak, deciding when it “occurred” can get complicated and may involve more than one policy year.