What Is an Occurrence Policy?

An occurrence policy covers claims made for injuries sustained during the life of an 澳洲幸运5官方开奖结果体彩网:insurance policy. Under these types of contracts, the insured party has the right to request compensation for damages that occurred within the timespan that the policy was active, even if several years have since passed and the insurance agreement is no lon﷽ger in force.

Understanding Occurrence Policies

澳洲幸运5官方开奖结果体彩网:Liability insurance policies generally fall into one of two categories: 澳洲幸运5官方开奖结果体彩网:Claims-made or occurrence. The latter offers protection against financial l🍸oss on incidents that happened while the policy was in effect, regardless of when they're flagged and became apparent. In other words, it's possible to file a claim later, long after the contract has expired, provided there's evidence that its cause or triggering event took place during the period the insurance was active.

Occurrence policies cater specifically to events that may cause injury of dam💙age years after they occur. For example, if an individual is exposed to hazardous chemicals, a significant amount of time could passꦛ before they fall ill.

Occurrence coverage will usually cover the employer and the former employee f🎉or life. Years can pass before the injuries or damages become evident, and the policyholder is still protected, even after stopping insurance or switching to another provider.

Insurers typically place a cap on the total coverage offered through such a policy. One form of cap l𒅌imits the amount of coverage offered each year but lets the coverage limit reset each year. For instance, a company that purchases five years of occurrence coverage with an annual cap of $1 million will allow the policyholder to have up to $5 million in total coverage.

Occurrence Policies vs. Claims-Made 

Claims-made insurance only pays out if a claim is filed while the policy is activ⭕e. That means if you cancel protection and then ask for compensation, you won’t be given it—unless an extended reporting period (ERP) or “tail coverage” is purchased.

澳洲幸运5官方开奖结果体彩网:Business insurance&nb﷽sp;policies are often offered as either a claims-made policy or an occurrence policy. While the claims-made policy provides coverage for claims when the event is reported, the occurrence policy prov🐠ides coverage when the event occurs.

Claims-made policies are used to cover the risks associated with business operations, such as the potential for mistakes associated with errors and omissions in 澳洲幸运5官方开奖结果体彩网:financial statements. They are also applied to cover businesses from claims made by employees, including wrongful termination, sexual harassment, and discrimination allegations. This type of liability is referred to as 澳洲幸运5官方开奖结果体彩网:employment practices liability (EPLI)♚, and might also cover the actions of directors and offi🌜cers of the business.

Until the mid-1960s the claims-made wording didn’t exist, and into the early to mid-1970s 💯its use was sporadic. The occurrence form now dominates, except for most professional and ✅executive liability exposures, where claims-made policies rule.

Advantages and Disad𝄹vantages of an Occurrence Policy

The most obvious benefit of an occurrence policy is that it offe🉐rs long-term protection. As long as coverage is in place when the incident occurred, it’s po🎀ssible to make a claim on that period years into the future.

Another advantage is that occurrence policy costs tend to be fixed. Premiums generally don’t increase unless the 澳洲幸运5官方开奖结果体彩网:risk profile of the insured changes.

On the downside, o꧋ccurrence policies are, understandably, more expensive than claiꦓms-made ones. Occasionally, they can be harder to come by, too.

There’s also the risk that a company taking out such a polic🍌y underestimates the level of damages it could incur later on down the line, forcing it, as a result, to pay out a chunk from its own pocket.