Deciphering the Jargon: Claims-Made vs. Occurrence

Sometimes it's easy to get lost in the terminology describing policy types. With this in mind, here are the key differences between Occurrence and Claims-Made policies that really make a difference for most D.C.s.

Insurance

Deciphering the Jargon: Claims-Made vs. Occurrence

While we try to make obtaining your D.C. malpractice insurance as painless as possible, sometimes it's easy to get lost in the terminology used to describe the types of policies available. Here are the key differences between Occurrence and Claims-Made policies that really make a difference.


Let’s start with the description of the two types of malpractice policies—Occurrence and Claims-Made.

Occurrence is the more popular of the two. It provides coverage for any claims that are made for services provided during the policy period, regardless of when the claim is reported.

Claims-Made is more complex. Claims-Made policies provide coverage for claims resulting from incidents that occur on or after the retroactive date of the policy and before the policy terminates. The incident must also be reported in writing during the policy period or during an extended reporting period. Upon termination of the policy, you have the option to purchase an Extended Reporting Endorsement or "Tail Coverage," which will allow claims to be reported for an indefinite period of time, as long as the incident occurred on or after the retroactive date and before termination of the policy.

Another difference between Occurrence and Claims-Made policies is cost. An Occurrence policy offers a steady base premium. The base premium does not increase with time. In contrast, a Claims-Made policy offers a lower premium during the first four years of the policy. The premium increases each year until reaching maturity at year five. These savings are attractive in the early years of the policy; however, the cost of “Tail Coverage” can offset these savings. Therefore, it is best for D.C.s to evaluate their financial situation to see what is a better fit—upfront savings or potential backend costs.

To better illustrate how each type of policy compares, NCMIC has created the Malpractice Insurance Guide, a resource covering the basics of malpractice coverage.

If you still have questions, our representatives are ready to help you navigate the process. They can be reached at 800-769-2000, ext. 3555.


The information in the NCMIC Learning Center is offered solely for general information and educational purposes. It is not offered as, nor does it represent, legal or professional advice. Neither does this information constitute a guideline, practice parameter or standard of care. You should not act or rely upon this information without seeking the advice of an attorney familiar with the specific legal requirements of the state(s) in which you practice. If there is a discrepancy between the site and an insurance policy you have with NCMIC, the policy will prevail.