What is the difference between “Claims Made” vs. “Occurrence” policy?
Commercial or Business Insurance are usually offered in two forms. One is a Claims Made Policy and the other is an Occurrence Policy. There are some large differences in the two that every Oklahoma business owner should be aware.
For example, if you are contractor and build a wall, chances are that wall will exist long after you have retired from your business. A number of years later, the wall allows water in and causes damage. Upon inspection, your work is found negligent. How does your Oklahoma Business Insurance handle a claim from so long ago?
It depends on the types of coverage you chose and whether the policies were “Claims Made” or “Occurrence” policies.
Claims Made Coverage provides coverage only so long as the insured continues to pay premiums for the initial policy and any subsequent renewals. Once premiums stop, the coverage stops for any claims not known or made to the insurance company during the coverage period.
Occurrence Coverage is insurance that provides coverage for the act when it occurs – regardless of when it is reported. If you had coverage under an occurrence policy in 2000 and the claim is reported today (they just found the defect in the wall, like the story above, for example) then the claim is covered.
In my opinion, Occurrence Coverage is the better choice to keep your business protected without any gaps.