An occurrence policy provides coverage for an incident that occurs during the term of the policy, regardless of when a claim arising from the incident is made. A claims-made policy provides coverage for claims arising from incidents that occur and are reported to the insurance company while the policy is in force.
Here’s an example to show the differences. “Dr. Van” had a malpractice policy effective from July 1, 2017 to June 30, 2018 and it is an occurrence policy. He doesn’t renew the policy. On September 3, 2018, a claim is filed against him for something that occurred on August 8, 2017. Because the incident occurred during the period in which he was covered by the policy, he was covered for that claim, even though the notice of claim was filed after the policy ended. However, if “Dr. Van” had a claims-made policy, he would not have been covered because the coverage was not active when the notice of claim was reported.
If you currently own a claims-made policy, careful consideration should be made if you are considering canceling or switching coverage providers. If you do decide to end your current claims-made policy, you can purchase "tail" coverage.
Determining which coverage is better for you depends on your personal circumstances. A claims-made policy offers more flexibility and is generally more affordable but could potentially leave you uninsured if you don’t purchase additional coverages. An occurrence policy offers you the advantage of more permanent coverage without having to purchase additional coverages, but it can be more costly.