Claims Made vs Occurrence Policies: What You Need To Know
Insurance policies are typically written on one of two bases: claims made or claims occurring. Understanding the difference is essential, particularly when arranging professional risks insurance, as it can determine whether a claim is paid — or declined.
Below, we explain how each type of policy works, provide practical examples, and outline why the distinction matters for your business.
What Is a Claims Made Policy?
A claims made policy covers claims that are made against you and notified to your insurer during the active policy period, regardless of when the work giving rise to the claim was carried out (subject to any retroactive date).
Most professional indemnity insurance policies are written on a claims made basis.
Key Features of a Claims Made Policy
- Covers claims made during the policy period
- Usually includes a retroactive date
- Requires prompt notification of circumstances that may give rise to a claim
- Continuous cover is essential
Example: Professional Indemnity Insurance
A Professional Indemnity Insurance policy will typically specify a retroactive date. This date may go back several years — often to when you first purchased uninterrupted cover.
If a claim is made today relating to advice or services you provided three years ago, your policy can respond — provided:
- The retroactive date precedes the work in question
- The policy is active when the claim is made
- You notify the insurer correctly
Importantly, claims made policies may also respond to claims submitted after expiry — but only if you notified the insurer of the relevant circumstances during the policy period.
For example, if a client expresses serious dissatisfaction and you believe a claim is likely, you should notify your insurer immediately. If the client later files a formal claim — even after your policy has expired or you’ve changed insurers — your previous insurer may still respond.
This makes proactive communication and uninterrupted cover critical.
What Is a Claims Occurring Policy?
A claims occurring policy covers incidents that occur during the policy period, even if the claim itself is made years later.
The trigger is when the event happened — not when the claim is submitted.
Key Features of a Claims Occurring Policy
- Covers incidents that occur during the policy period
- Claim can be made after the policy expires
- No need for a retroactive date
- Common in certain statutory liability covers
Example: Employer’s Liability Insurance
Employers’ Liability Insurance is typically written on a claims occurring basis.
If an employee is exposed to hazardous substances while working for you, symptoms may not develop for many years. Under a claims occurring policy, the insurer that covered you at the time of exposure would respond — even if the claim arises long after the policy ended.
The same principle applies to repetitive strain injuries or long-term health conditions caused by workplace practices.
Claims Made vs Claims Occurring: The Key Difference
The core distinction lies in what triggers the policy:
Claims Made
Covers claims made and notified during the policy period
Requires continuous cover
Usually includes a retroactive date
Claims Occurring
Covers incidents that occurred during the policy period
Linked to when the event happened
No retroactive date required
If a business cancels a claims made policy and fails to arrange replacement cover, it may leave itself exposed to future claims relating to past work.
Why This Matters for Professional Risks Insurance
For businesses purchasing Professional Risks Insurance, understanding how cover is triggered is vital.
Professional indemnity, directors’ and officers’ insurance, and certain specialist liability covers are often written on a claims made basis. This means:
- Gaps in cover can invalidate protection for past work
- Changing insurers requires careful handling of retroactive dates
- Run-off cover may be required if you cease trading
If you are arranging professional indemnity insurance for ongoing projects or long-term advisory work, a properly structured claims made policy with an agreed retroactive date will usually provide the protection required — provided cover is maintained continuously.
How to Check Which Basis Your Policy Uses
Your policy schedule and wording will clearly state whether it is written on a claims made or claims occurring basis.
If you are unsure:
- Review the insuring clause
- Look for references to a retroactive date
- Check the notification requirements
- Speak to a specialist broker
Misunderstanding your cover could lead to underinsurance or an uninsured claim.
The Importance of Expert Advice
Insurance wording can be technical, and small differences can significantly affect how a claim is handled.
Working with a specialist broker ensures:
- The correct policy basis is arranged
- Retroactive dates are protected
- Notification procedures are understood
- Your business is not exposed to unnecessary risk
At Kestrel Insurance, our professional risks team helps businesses structure cover correctly from the outset — so there are no surprises when it matters most.
If you would like advice on your professional indemnity or wider professional risks insurance, contact our team for guidance tailored to your business.
