This clause determines *when* an insurance policy covers you. With "occurrence" policies, you're covered for any incident that happens during the policy period, even if you report the claim years later. With "claims-made" policies, you're only covered if both the incident *and* the claim happen while your policy is active. This matters hugely because if you switch insurers and something goes wrong, a claims-made policy might leave you uninsured for old incidents. For example, if a client sues you in 2025 for work you did in 2023, an occurrence policy from 2023 would still cover you—but a claims-made policy wouldn't unless it was also active in 2025.
Always push for "occurrence" policies if you can afford them—they give you lasting protection. If you must accept "claims-made," negotiate for "tail coverage" (see below) that extends protection after you leave or the policy ends, so you're not suddenly exposed to old claims. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause determines *when* an insurance policy covers you.
Why should I care about this clause?
With "occurrence" policies, you're covered for any incident that happens during the policy period, even if you report the claim years later.
What are my options?
With "claims-made" policies, you're only covered if both the incident *and* the claim happen while your policy is active.
How does this affect small businesses?
This matters hugely because if you switch insurers and something goes wrong, a claims-made policy might leave you uninsured for old incidents.