Occurrence vs Claims-Made Policy: Definition & Compliance Guide

Occurrence and claims-made are the two forms in which liability insurance policies are written. They define when coverage applies - specifically, what must happen during the policy period to trigger coverage. The distinction is fundamental to understanding what a policy actually covers and is one of the most consequential details to check when reviewing a certificate of insurance against a contract.

The Occurrence Form

An occurrence policy covers any incident that occurs during the policy period, regardless of when the claim is made. If a policy is active from January to December 2025, any injury or damage that occurs during that window is covered - even if the claim is not filed until 2027 or 2030.

Once the policy period ends, the coverage for incidents that occurred during that period remains available indefinitely. The insured does not need to maintain the policy after it expires for past incidents to be covered.

This is the simplest, most protective form for the insured. General liability insurance and commercial auto insurance are typically written on an occurrence basis.

The Claims-Made Form

A claims-made policy covers claims that are made (filed) during the policy period - not when the underlying incident occurred. The incident must still fall on or after a retroactive date specified in the policy, but the claim must be reported during the active policy period (or during an extended reporting period).

This means:

• If a policy is active from January to December 2025, a claim filed in 2027 for a 2025 incident is not covered - even though the incident happened during the coverage period
• If the policy is cancelled, coverage for past incidents disappears unless a tail endorsement is purchased

Professional liability, errors and omissions, employment practices liability, and directors & officers policies are almost universally written on a claims-made basis.

The Retroactive Date

Every claims-made policy includes a retroactive date - the earliest date from which covered incidents are recognized. Claims arising from incidents before the retroactive date are excluded even if the claim itself is made during the active policy period.

This date matters enormously in contract compliance:

• If a vendor begins work on January 1, 2025, and their claims-made policy has a retroactive date of January 1, 2026, any professional errors from the first year of work are excluded
• Contracts should specify that the retroactive date must be on or before the commencement of services under the contract

When reviewing a COI for a claims-made policy, the retroactive date should be visible in the policy details. If it is not shown, request it.

Tail Coverage (Extended Reporting Period)

When a claims-made policy expires or is cancelled, the insured can purchase a tail endorsement - formally called an extended reporting period (ERP). The tail allows claims to be reported for a specified period (typically one to five years) after the policy ends, for incidents that occurred during the original policy period.

Without a tail, a vendor who cancels their professional liability policy after completing work for you is effectively uncovered for any claims that arise later - even for work done while the policy was active.

Best-practice contracts include requirements that:

• The insured maintain professional liability coverage throughout the engagement period
• If coverage is cancelled or not renewed, a tail of at least two to three years must be purchased
• Evidence of tail purchase must be provided to the contracting party

Why Contracts Specify Policy Form

Many contracts, particularly in construction and professional services, explicitly specify that coverage must be on an occurrence form. For general liability, this is almost always achievable. For professional liability, it is generally not - claims-made is the industry standard.

When a contract specifies occurrence form but the vendor submits a claims-made COI, the requirement is technically not satisfied. The appropriate response depends on context: if the occurrence requirement applies to professional liability (which is rarely written occurrence), the parties need to address it in the contract rather than simply flagging the COI as non-compliant.

What to Check When Reviewing a COI

• Does the general liability section show "occurrence" form (if required)?
• Does the professional liability section show "claims-made"? If so, is the retroactive date visible and appropriate?
• Is the retroactive date on or before the engagement start date specified in the contract?
• Does the contract include tail coverage requirements, and has the vendor confirmed they will comply if the policy is cancelled?

How Bramble Helps

Bramble reads policy form requirements from your contracts and checks the form type noted on submitted COIs, flagging occurrence-vs-claims-made mismatches and missing retroactive date information. When a claims-made policy is submitted without a visible retroactive date, Bramble identifies it as an incomplete submission requiring follow-up.

Visit getbramble.com to see how Bramble handles contract-vs-COI compliance including policy form verification.