Claims-Made vs. Occurrence Malpractice Insurance (2024)

FAQs

Should I get claims made or occurrence malpractice insurance? ›

Occurrence policies provide the best protection and, though somewhat more expensive than claims made policies, offer long-term peace of mind. Unfortunately, they are becoming increasingly hard to find. Claims made coverage, by contrast, will only apply if the claim is made while the policy is still in effect.

The two basic types of malpractice insurance are "claims-made" and "occurrence-made." "Claims-made" insurance protects you from malpractice claims only if the company that insured you at the time of the alleged "occurrence" is the same company at the time the claim is filed in court.

Key Takeaways: A claims-made policy only covers those that occur and are reported within the policy's timeframe, unless tail coverage is also purchased. An occurrence policy provides lifetime coverage for incidents that take place during a policy period, regardless of when the claim is reported.

A claims-made policy covers the insured for an incident that occurred during the policy period and was reported as a claim while the policy remained in force. When you start a claims-made policy, the original inception date, known as the retroactive date, becomes a permanent part of the claims-made policy.

Claims-made coverage is portable. You can take the coverage from one insurance company to another. The advantage to an occurrence policy is its permanence. The period of time you are insured under an occurrence policy is protected forever by the policy you had that year.

In short, occurrence-based policies provide ample coverage as long as you keep renewing them. For this privilege, you'll generally pay more than you would for claims-made policies. With claims-made policies, the amount of coverage you purchase must last for as long as you keep your policy.

Multiple studies have concluded that misdiagnosis is the most common cause of malpractice claims. Misdiagnosis includes failure to diagnose a medical problem that exists or making a diagnosis that is incorrect.

Common concerns include misdiagnosis, surgical errors, medication mistakes, and inadequate treatment. These issues can lead to severe consequences such as prolonged suffering, worsened medical conditions, financial burdens from additional medical expenses, and emotional distress.

Essentially, for a claim to be considered for coverage, an occurrence-based policy needs to be active when the act or incident occurs; claims made policies have to be active when the claim is made.

Because the acts taking place during an occurrence policy are normally covered regardless of when the 'claim' is made, coverage for acts taking place during the policy period remains in place even after the occurrence policy expires or a switch is made to a claims-made policy.

What is the difference between Medpro occurrence and claims-made? ›

Occurrence: Occurrence coverage is triggered the moment treatment occurs, regardless of when an eventual claim is made. For example, if a claim is made today based on treatment rendered in 2011, the 2011 occurrence policy responds. Claims-made: Claims-made coverage is triggered when the claim is made.

In the case of a claims-made policy, however, determination of coverage is triggered by the date you first became aware and notify the insurer of a claim or potential claim. The insurer's policy in force on the date you became aware and give notice is the insurer who must defend and settle the claim.

Tail coverage only applies to a claims-made policy. It extends the amount of time a claim can be brought against you and reported. Because it doesn't matter when a claim gets filed with occurrence insurance, as long as the loss occurred during your policy period, tail coverage isn't necessary.

Claims-made insurance provides continuous coverage for your prior acts as long as you have insurance today and maintained it continuously in the past. Your current policy pays for claims arising from incidents that happened long ago even if you had insurance with another company.

Negligence: Consequences may vary depending on the industry, and penalties may not be as severe as in medical malpractice cases. Malpractice: Can lead to serious consequences, including legal actions, license revocation, and significant financial liabilities for healthcare professionals.

Premium Cost: Typically for the first five years of coverage, claims-made policies tend to be less expensive than occurrence policies. However, this price typically tends to even out with occurrence policies as time goes on and your business faces more exposures.

The occurrence form is the original contract created by the insurance industry. The claims-made form was devised later in response to long-tail claims such as asbestosis that can take 20-30 years to manifest itself. It protects the insurance company from claims reported decades after the policy has expired.