Professional Indemnity Insurance
Liability Claims Made or Claims Occurring
Claims Occurring and Claims Made are the two bases of cover for liability insurance.
You are probably asking yourself ‘Does it matter?’ The answer is yes. In certain circumstances the selection of the wrong policy can be a very significant disadvantage.
What is a claims occurring basis?
An insurance policy on a ‘Claims Occurring’ basis meets claims that occur during the policy period irrespective of when the claim is made. The usual general liability insurances such as employer’s liability, public liability and product liability are normally on a ‘Claims Occurring’ basis.
What is a claims made basis?
An insurance policy on ‘Claims Made’ basis meets claims that are made and reported during the policy period for work undertaken after the Retroactive Date shown in the policy. ‘Claims Made’ basis is the market norm for Professional Indemnity and others, such a Medical Malpractice, Directors & Officers Liability, Trustees Indemnity and the like.
The requirement of a ‘Claims Made’ policy to have claims reported during the policy period is very onerous upon the Insured, and the insurer will usually ask for a No Claims Declaration at each renewal stating that after investigation there are no known claims or circumstances that could give to a claim that have not been reported, signed by a person authorised to make the statement.
Failure to report a claim in the correct policy may lead to the claim being declined. There is no similar requirement for a No Claims Declaration for a ‘Claims Occurring’ policy, but the policy will contain claims conditions that need to be complied with in order for a claim to be met.