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Claims Made vs. Occurrence

Malpractice liability insurance for mid-level providers is in many ways similar to coverage for the physician, though there are notable differences, especially in significantly lower costs.

Two basic types of coverage exist: “claims made” and occurrence.

Occurrence policies will cover the care provider for a claim involving any incident that occurred while the practitioner was enrolled in the policy, even if the policy is no longer in effect. The carrier does not set limitations for claims filing; so long as the plaintiff can legally bring a charge, coverage will apply. 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. Once the practitioner discontinues coverage, he or she is no longer covered by the claims made policy. Claims made coverage is somewhat less expensive than occurrence coverage and therefore seems attractive to insurance shoppers. However, claims made coverage has drawbacks (the limited duration of coverage).   With the addition of tail coverage, it actually may prove more costly over the long-term.

Tail coverage refers to the supplemental insurance practitioners must purchase to “extend” the protection of the claims made policy, which is quite costly. If, for example, a practitioner intends to retire and therefore discontinue a claims made policy, he or she would purchase tail coverage to maintain protection should a patient bring a suit regarding an incident made while the claims made policy was in effect.

These scenarios clarify claims made versus occurrence policies: Suppose you are sued for an event that took place in 1998, at which time you had an occurrence policy that has subsequently expired due to your retirement. The policy would apply to the suit. However, if you had claims made coverage in 1998 but it has subsequently lapsed, the policy will not apply. If you purchased tail coverage upon discontinuation of the claims made policy, it would apply.