Shopping for business insurance can feel like learning a new language. One of the first terms you’ll likely run into is the difference between a claims-made policy and an occurrence policy. They often cover similar risks like lawsuits, negligence, or client disputes, but the key difference is when the coverage kicks in. Claims-made insurance covers claims filed while the policy is active, as long as the incident happened after the retroactive date. Occurrence insurance covers incidents that happen during the policy period, no matter when the claim is filed.

Understanding this timing isn’t just a technical detail. It can determine whether a future claim is paid or denied. It also affects how your protection grows as your company scales.

Key Takeaways

• Occurrence policies cover incidents that happen during the policy period, no matter when the claim is filed.
• Claims-made policies cover claims filed while the policy is active, as long as the incident happened after the retroactive date.
• Tail coverage extends the reporting window for claims-made policies after they end.
• The right choice depends on how your business works, how long risks can linger, and how your insurance needs will evolve.

Claims-Made vs. Occurrence at a Glance

‍What Is a Claims-Made Policy?

A claims-made policy provides coverage for claims made and reported while the policy is active (or during an extended reporting period). The incident must have occurred on or after the policy’s retroactive date. The retroactive date is the starting line for your protection. Anything that happened before that date isn’t covered.

For example, a software consulting firm buys an E&O policy that starts in 2022 with a retroactive date of January 1, 2020. If a client files a lawsuit in 2025 for work completed in 2021, the policy would respond. The work happened after the retro date, and the claim was reported while the policy was active. Now imagine the firm cancels coverage in 2024 and doesn’t buy tail coverage. That same 2025 claim would not be covered.

Claims-made policies are common for:

• Professional Liability (E&O)
• Directors & Officers Liability (D&O)
• Employment Practices Liability (EPLI)
• Cyber Liability

These types of claims often surface months or even years after work is performed. Claims-made coverage gives insurers a clear reporting period and allows you to carry your coverage forward as long as you maintain continuity.

What Is an Occurrence Policy?

An occurrence policy covers incidents that happen during the policy period, no matter when the claim is filed. As long as the event happened while the policy was active, the policy will respond, even if the claim arrives years later.

For example, a customer slips and falls at your business in 2023, but you don’t hear about the lawsuit until 2026. Your 2023 occurrence based General Liability policy would still cover the claim. There’s no need for tail coverage because coverage is tied to the date of the incident.

Occurrence policies are commonly used for:

• General Liability
• Commercial Auto Liability
• Workers’ Compensation
• Umbrella and Excess Liability

These lines often involve physical incidents that are easy to date and typically reported quickly.

Common Coverage Gaps to Avoid

Switching policy forms or missing key details can create expensive blind spots. The biggest pitfalls include:

• Switching from claims-made to occurrence without tail coverage: This can leave you unprotected for incidents that happened in the past but have not yet resulted in a claim.
• Losing your retroactive date: When switching insurers, make sure your new policy keeps your original retro date. Losing it resets your coverage history.
• Failing to report potential claims: Claims-made policies often require you to report any incident that might reasonably lead to a claim. Waiting too long can void coverage.
• Exhausting limits: Claims-made policies share one aggregate limit across policy years. Multiple claims can drain that limit faster than expected.
• Throwing away old occurrence policies: You may need them years later. Keep organized copies of all past policies.

How to Choose the Right Policy Type

There’s no universal right answer. The best choice depends on your industry, the nature of your risks, and your long-term plans. Here are questions to guide your decision:

• What industry am I in? Most professional policies like E&O, D&O, and Cyber use the claims-made format. General Liability is typically occurrence based.
• How long after the work could issues arise? If clients bring claims years later, a claims-made format is usually better.
• Do I switch insurers often? If yes, occurrence policies can simplify things because you do not need to manage retro dates or tail coverage.
• What is my long-term plan? If you plan to sell or wind down your business, make sure to budget for tail coverage on any claims-made policies.

Here’s a simple guide:

How Vouch Helps

At Vouch, we help ambitious companies understand and manage both types of coverage in a way that feels clear and seamless.

• Expert guidance: Our advisors explain which lines use which format and help you avoid common coverage gaps.
• Tailored coverage in one place: We offer both claims-made and occurrence policies with top carriers, so your protection works as a unified system.
• Digital ease, human clarity: Whether you are renewing E&O Insurance, adding Cyber Insurance, or updating General Liability Insurance, we ensure your coverage remains continuous.

Vouch is more than a broker. We’re your strategic partner in risk management, helping you stay protected through every stage of growth.

Frequently Asked Questions

Is one policy type less expensive than the other?

Claims-made coverage usually starts with lower premiums that increase over time. Occurrence coverage may cost more upfront but stay steady long-term.

Do I need tail coverage if I cancel a claims-made policy?

Yes. Without tail coverage (an extended reporting period), you lose protection for past incidents once your policy expires.

Can I switch from claims-made to occurrence?

You can, but you’ll need to buy tail coverage for the old policy or risk a coverage gap.

Which policy type is more flexible?

Claims-made, because you can set a retroactive date to cover earlier incidents as long as the claim is made while the policy is active.

Which does my company likely have?

Professional policies like E&O, D&O, Cyber, and EPLI are typically claims-made. Your General Liability policy is usually occurrence based.

Vouch Specialty Insurance Services, LLC (CA License #6004944) is a licensed insurance producer in states where it conducts business. A complete list of state licenses is available at vouch.us/legal/licenses. Insurance products are underwritten by various insurance carriers, not by Vouch. This material is for informational purposes only and does not create a binding contract or alter policy terms. Coverage availability, terms, and conditions vary by state and are subject to underwriting review and approval.