How does an occurrence policy differ from a claims-made policy?

• A. Occurrence covers incidents that occur during the policy period regardless of when the claim is filed; claims-made covers claims filed during the policy period.
• B. Occurrence covers only when claims are filed.
• C. They are the same.
• D. Occurrence never covers pre-policy incidents.

Answer: (A)

The key idea is how coverage is triggered: by the timing of the event vs the timing of the claim.

Under an occurrence policy, what matters is when the incident happened. If the incident occurred during the policy period, the policy covers it even if the claim is filed later, perhaps long after the policy has ended. This means you can move to a new insurer and still have past incidents covered as long as they occurred during the time the occurrence policy was in force.

Under a claims-made policy, coverage depends on when the claim is actually filed. The incident itself could have happened at any time, but the claim must be reported during the policy period for coverage to apply. Because of this, these policies often require tail coverage after the policy ends to handle claims made for incidents that occurred earlier but are reported later, and many have a retroactive date that limits coverage to incidents after a certain point.

So, the best description is that an occurrence policy covers incidents that happen during the policy period regardless of when the claim is filed, while a claims-made policy covers claims that are filed during the policy period.