What is claims made vs occurrence?

Liability claims rarely arrive while the dust is still in the air — the work happens in one year, the lawsuit in another. Claims-made and occurrence are the two answers to the question that gap creates: which policy year owes the claim? Most explanations of this live on medical malpractice sites, but the distinction governs every E&O, D&O, EPLI, and cyber policy a business buys, and misunderstanding it is how companies discover — after canceling a policy — that they erased coverage for work already done.

The two triggers

The Texas Department of Insurance states both cleanly. Occurrence policies “provide coverage for incidents that happen during your policy period, regardless of when you file a claim.” Claims-made policies cover incidents that “happen during your policy period and are reported to your insurance company during the policy period.” One trigger is the incident date; the other is the claim date — plus, on most forms, a reporting requirement.

Make it concrete. Your firm makes a mistake in 2023; the client sues in 2026.

• Occurrence: the 2023 policy answers, even if you canceled it in 2024. The coverage is permanent for that year’s work.
• Claims-made: the 2026 policy answers — but only if you still have one, with the same carrier or matching terms, and only if its retroactive date reaches back past 2023. No active policy in 2026, no coverage for the 2023 mistake.

The machinery that comes with claims-made

Three moving parts do all the work:

1. The retroactive date. The policy covers wrongful acts after this date. Keep it anchored at your original inception when you renew or switch carriers; letting a new policy reset it forfeits every prior year.
2. Continuity. Because the active policy answers old work, a lapse — even a short one — can void protection for everything before it. Insureon’s warning is the incumbent consensus: uninterrupted coverage matters precisely because “years may pass between an incident and the subsequent lawsuit.”
3. The extended reporting period. When a claims-made policy ends without replacement, you buy an ERP — universally nicknamed tail coverage — which IRMI defines as the period after expiry during which a claim still triggers coverage as if made during the policy period.

Which form you’ll actually be offered

You rarely get to choose in the abstract. General liability is sold on occurrence forms as a matter of market practice. Professional lines run the other way — Insureon describes professional liability flatly as “a ‘claims-made’ policy,” and E&O, D&O, EPLI, and cyber typically follow the same structure. The choice question is live mainly in medical malpractice, where both forms are sold side by side — that decision gets its own page.

Where buyers get burned

• Canceling after closing the business. The company winds down; the exposure doesn’t. Claims-made coverage stops answering the day the policy does, unless a tail is purchased.
• Switching carriers without matching the retroactive date. A cheaper quote with a new retro date is a different, smaller product.
• Late reporting. On claims-made forms the report date is a coverage condition, not an administrative courtesy. When in doubt, report — the filing decision has its own mechanics.

Questions buyers actually ask

Is claims-made or occurrence better? Occurrence is simpler: pay for the year, own the year forever. Claims-made is manageable if you maintain continuity and budget for the tail at exit. “Better” is a question about your discipline and exit plans, not the forms.

Is claims-made or occurrence more expensive? We don’t quote premium figures. Structurally: a first-year claims-made policy insures claims about one year of work, so it starts below the mature rate and rises as your retroactive period accumulates — and the tail purchase at the end can consume the early difference. Compare lifetime cost, not year one.

Is claims-made or occurrence more common? By line: general liability is occurrence; professional lines are predominantly claims-made. Your declarations page says which you hold — it’s stated, not implied.

Do you need tail coverage for occurrence? No. Tail exists solely to patch the claims-made reporting window; an occurrence policy already covers its years forever.

What is a claims-made policy? A policy that answers claims filed while it’s in force, for work done after its retroactive date — which is why it must be kept alive, or ended with a tail.

Definitions above follow the Texas Department of Insurance and IRMI; policy forms vary, and the declarations page of your own policy is the final word on which trigger you bought.