What is difference between Claims Made insurance form & Occurrence?
. . . and what is the trigger point of a claim?
Answers:
Oh, this is a HUGE difference.
On a claims made policy (common on malpractice, errors & ommissions, and directors and officers policies), the insurance company single pays claims that are made during the policy period. The claim ALSO have to OCCUR (ie, the incindent, not just the claim) during coverage length. Coverage period is that policy time of year, all the approach back to the "retroactive date".
What that way, is that if you have a claim that "occurs" on March 1, 2005, and your policy runs from 01/01/05 to 01/01/06, if the claim isn't put surrounded by before 01/01/06 (don't droop me agents for the reporting period, it's a short time ago an example), and you let your policy expire, IT IS NOT COVERED. If you renew your polciy for the subsequent three years, well, the retroactive date is the date of the ORIGINAL policy, 01/01/05, so it would be covered.
On an phenomenon form, there's no "expiration date" to file a claim - if the incident happen during the policy period, there's coverage - even if the policy expired 3 years ago, and there's no coverage.
That's a principal reason why medical malpractice rates are LOW when the doctor first starts, and increase steadily for the first 5-10 years - the first year, the policy with the sole purpose covers 1 year of claims. The second year, it covers 2 years of claims. The 3rd year, it covers three years of claims. Then if the doctor shops out coverage, ANY new company is cheaper, because . .. . they are individual covering ONE year of claims, while the OLD company is covering three or more.
Occurrence is ALWAYS a better form to have, it's only not always available.
Two widely adjectives approaches are used by insurers to determine coverage when writing liability insurance. The difference centers upon the event that triggers coverage, and is known as the “coverage trigger.” The two approaches are agreed as “claims-made and reported” (“claims made”) and “occurrence.”
For example, your business package policy may include commercial nonspecific liability insurance written on an occurrence font. Your employee benefits liability, professional liability and employment practices liability insurance will use the claims-made coverage trigger.
The incidence policy’s coverage trigger is tied to the date of the event or accident giving rise to the claim. Under an frequency contract, the policy in force on the date of the event cause the loss must respond with both defense and indemnity. The claim may arise years after the policy have expired, and the occurrence coverage trigger places little or no pressure on the date the insured receives awareness of the claim.