what is an occurrence policy 
an occurrence policy covers claims made for injuries sustained during the life of an insurance policy under these types of contracts the insured party has the right to request compensation for damages that occurred within the timespan that the policy was active even if several years have since passed and the insurance agreement is no longer in force understanding occurrence policiesliability insurance policies generally fall into one of two categories claims made or occurrence the latter offers protection against financial loss on incidents that happened while the policy was in effect regardless of when they re flagged and became apparent in other words it s possible to file a claim later long after the contract has expired provided there s evidence that its cause or triggering event took place during the period the insurance was active occurrence policies cater specifically to events that may cause injury of damage years after they occur for example if an individual is exposed to hazardous chemicals a significant amount of time could pass before they fall ill occurrence coverage will usually cover the employer and the former employee for life years can pass before the injuries or damages become evident and the policyholder is still protected even after stopping insurance or switching to another provider in insurance an occurrence is defined as an accident including continuous or repeated exposure to substantially the same general harmful conditions insurers typically place a cap on the total coverage offered through such a policy one form of cap limits the amount of coverage offered each year but lets the coverage limit reset each year for instance a company that purchases five years of occurrence coverage with an annual cap of 1 million will allow the policyholder to have up to 5 million in total coverage occurrence policies vs claims madeclaims made insurance only pays out if a claim is filed while the policy is active that means if you cancel protection and then ask for compensation you won t be given it unless an extended reporting period erp or tail coverage is purchased business insurance policies are often offered as either a claims made policy or an occurrence policy while the claims made policy provides coverage for claims when the event is reported the occurrence policy provides coverage when the event occurs claims made policies are used to cover the risks associated with business operations such as the potential for mistakes associated with errors and omissions in financial statements they are also applied to cover businesses from claims made by employees including wrongful termination sexual harassment and discrimination allegations this type of liability is referred to as employment practices liability epli and might also cover the actions of directors and officers of the business until the mid 1960s the claims made wording didn t exist and into the early to mid 1970s its use was sporadic the occurrence form now dominates except for most professional and executive liability exposures where claims made policies rule advantages and disadvantages of an occurrence policythe most obvious benefit of an occurrence policy is that it offers long term protection as long as coverage is in place when the incident occurred it s possible to make a claim on that period years into the future another advantage is that occurrence policy costs tend to be fixed premiums generally don t increase unless the risk profile of the insured changes on the downside occurrence policies are understandably more expensive than claims made ones occasionally they can be harder to come by too there s also the risk that a company taking out such a policy underestimates the level of damages it could incur later on down the line forcing it as a result to pay out a chunk from its own pocket 