The terminology of business insurance is often difficult for policyholders to understand. Two of the terms used in such policies that are often a source of confusion are claims made and occurrence. A claims made policy refers to your current insurance policy, which will pay the costs associated with a claim you submit to the insurance company during the term of the policy. An occurrence policy refers to the fact that even though the policy may not still be in force, it will pay the costs associated with damages or injuries that occurred while it was in place. As long as you can prove that you did actually have a business insurance policy in place at the time of this incident, you can still submit a claim to the insurance provider.
The circumstances surrounding your business will determine which method you use when you have a claim to submit. There are advantages and disadvantages to both types of policies.
Claims Made Policy
With a claims made policy, you have the opportunity of topping up an occurrence policy that perhaps did not provide you with adequate coverage for your needs. Any previous restrictions you may have had on a previous policy can be broadened out significantly. However, the coverage you receive depends on your making an actual claim against the policy at the very time the incident occurs. It cannot have occurred before the renewal date and any claims for incidents that occurred before you renewed your policy will not be honoured.
For business owners there are many more advantages to taking out an occurrence policy for business insurance. Quite often a seemingly harmless accident occurs causing minor injuries to a customer or employee only to become more serious at a later date with complications developing from the injury. The same thing can occur when damage occurs in your place of business that you brush off as cosmetic damage only to find when you start your repairs that the problem is much more costly than you first suspected. If you document such incidents, you still have the opportunity to make a claim against your insurance even if you have renewed a new policy at this time or even if you have switched insurance providers.
The fact that you can enjoy peace of mind in switching insurance providers when you have an occurrence policy is very advantageous for business owners. In fact, such provisions for submitting a claim on an incident that occurred during the term of the policy as long as you are in business. Thus you don’t have to feel that you must stay with an insurance provider that is more expensive than others for fear of not receiving the full coverage that you need for past accidents.
With a claims made policy, there is only one limit in place for each event, whereas if there is a lawsuit involved in the occurrence, then it is possible that the limits of coverage can change over the years.