Occurrence Vs Claims Made General Liability

Estimated reading time: 7 minutes

Return To: North Carolina General Liability Insurance – The Ultimate Guide

When it comes to protecting your business from potential lawsuits, proper liability insurance is essential. General liability insurance can help cover the costs of litigation and damages related to a product or service-related claims, customer injuries on your property, and much more.

However, it’s important to understand the different types of policies available in order to make sure you have the coverage that best suits the needs of your business.

In this article, we will compare occurrence vs claims made General liability policies, examine their key differences, and provide helpful tips on selecting the right policy for your business.

Explain the Basics of General Liability Insurance

When it comes to general liability insurance, there are several different types of coverage available. The most common type is known as “product liability” which covers claims related to any product that a business sells or distributes. This type of coverage can help protect a business from any legal costs associated with a claim related to a product they sold or distributed.

Another important aspect of general liability insurance is that it can provide protection against third-party claims. This means that if someone makes a claim against your business due to an incident involving your products or services, your insurer will be able to cover the cost of defending your business against the claim. This can be especially beneficial for businesses that may not have the resources necessary to defend themselves in court.

Finally, general liability insurance can also provide protection for certain types of advertising and marketing activities conducted by a business. For example, if your company runs an ad campaign that results in someone making a false statement about your product or service, your insurer may be able to cover any legal costs associated with defending yourself against the claim.

Overall, having general liability insurance is essential for any business looking to protect itself from potential legal costs and other damages associated with various types of claims. By understanding what types of coverage are available and how they work, businesses can ensure they are properly protected in case something unexpected happens.

Understanding the Difference Between Occurrence and Claims Made Policies

Claims made general liability insurance is a type of insurance policy that provides coverage for businesses in the event of claims related to bodily injury or property damage resulting from their products, services, or operations. This type of policy only provides coverage for damages that happen during the timeline of the policy and does not include any events that happened prior to the policy being issued.

It is important for business owners to understand how claims made general liability policies work so they can select the best option for their business’s needs.

The main difference between an occurrence policy and a claims-made policy lies in when it pays out a claim.

Occurrence Form Covers Losses

An occurrence policy will pay out any claim regardless of when it was reported, providing coverage for incidents that occurred during the timeline of the policy even if it wasn’t reported until after the policy expired.

Claims Made Policy Covers Losses

A claims-made general liability policy, however, only pays out on incidents that were reported within its timeframe and does not provide coverage for incidents that occurred before the start date of the policy.

Additionally, depending on your particular industry and risk profile, you may be able to secure some discounts on your premium costs if you switch from an occurrence to a claims-made policy as well.

When selecting a claims-made general liability insurance policy for your business, there are several important considerations to keep in mind. First off, make sure you have enough limits in place should you ever need it – having too little coverage could leave your business vulnerable in the event of an unexpected risk event.

Additionally, many insurers offer retroactive coverages which allow them to cover legal costs associated with something that occurred before their timeline started but was still reported within their timeframe – be sure to check with your insurer whether they offer this type of protection or not.

Finally, make sure you understand what types of risks are covered under your particular plan so you don’t end up paying more than necessary if something happens outside of its scope.

Overall, having adequate knowledge about what protects are offered by different types of policies can help ensure you’re getting exactly what you need from your insurer and aren’t leaving yourself exposed to potential legal costs should something unfortunate occur down the line.

The Pros and Cons of Claims Made and Occurrence General Liability Insurance

There are several pros and cons associated with both types of policies that should be taken into account when selecting one for your business.

For instance, while a claims made policy typically has lower premiums than an occurrence policy, they may not provide coverage for incidents that happened prior to the start date of their timeline.

Similarly, an occurrence policy may provide more comprehensive coverage but could end up costing more in premiums over time.

When selecting a general liability policy for your business, there are several other important considerations to keep in mind as well.

First off, make sure you understand what risks are covered under each type of policy so you don’t end up paying more than necessary if something happens outside of their scope – many insurers offer different levels of coverage depending on what type of risk you’re insuring against.

Additionally, some insurers also offer retroactive coverages which allow them to cover legal costs associated with something that occurred before their timeline started but was still reported within their timeframe – be sure to check with your insurer whether they offer this type of protection or not.

Best Practices for Selecting Between a Claims Made General Liability Policy and an Occurrence Form General Liability Policy

When selecting which type of policy is best for your business’s needs, there are several key considerations to keep in mind:

Understand what risks are covered under each type of policy and make sure you have adequate coverage for all potential liabilities.
Make sure to compare premiums between different insurers to make sure you’re getting the best deal possible.
Check if your insurer offers prior acts coverage and/or tail coverage that could provide additional protection should something unexpected occur outside of the timeline of your policy.
Ensure that you have enough limits in place should you ever need them – having too little coverage could leave your business vulnerable in the event of an unexpected risk event.
Examine whether claims made or an occurrence policy would be better suited for your industry/risk profile – some industries may require more comprehensive coverage than others.

Overall, understanding these key differences between claims made and occurrence policies will help ensure that you’re getting exactly what you need from your insurer without leaving yourself exposed to potential legal costs should something unfortunate occur down the line.

FAQ Claims-Made vs Occurrence

Q: What is the main difference between claims made policy and an occurrence policy?

A: The main difference lies in when they pay out a claim. A claims made policy will only pay out if the incident occurred during its timeline and was reported within the same timeframe; an occurrence policy, however, pays out regardless of when the incident was reported, as long as it happened within its timeline.

Q: What should I consider when selecting which option is right for my business?

A: Consider what risks are covered under each type of policy and make sure you have adequate coverage for all potential liabilities. Additionally, compare premiums between different insurers to make sure you’re getting the best deal possible. Check if your insurer offers prior acts coverage and/or tail coverage that could provide additional protection should something unexpected occur outside of the timeline of your policy.

Q: Is there any industry-specific advice for selecting which option is right for my business?

A: Examine whether a claims made policy or an occurrence policy would be better suited for your industry/risk profile – some industries may require more comprehensive coverage than others. Additionally, it may be beneficial to consult with a financial or insurance professional who can offer more tailored advice based on your individual needs and circumstances.

Q: What happens if something occurs before my claim or occurrence general liability insurance timeline starts?

A: Some insurers may allow you to select a retroactive date for claims made coverage which allows them to cover legal costs associated with something that occurred before their timeline started but was still reported within their timeframe – be sure to check with your insurer whether they offer this type of protection or not.

The Final Verdict – Claims-Made Vs Occurrence

Selecting between a claims-made general liability policy and an occurrence form policy is an important task for business owners in order to determine the best coverage for their particular needs.

When making your selection, it’s important to compare different insurers’ premiums, check if they provide retroactive coverages, understand what risks are covered under each type of policy, and ensure you have enough limits in place should you ever need them.

If you’re still unsure what type of policy you need for your business, don’t hesitate to reach out to ALLCHOICE Insurance and let our Risk Advisors help you determine