There are two basic types of coverage: occurrence and claims made. While there is no difference in the kind of injury or damage covered, the two plans are different in how and when coverage is triggered.
An occurrence policy provides coverage for claims of alleged incidents that occur while the policy is/was active. The claim can be reported at any time in the future, even if the policy has cancelled. Coverage is available at the limits of liability, terms and conditions in effect at the time of the alleged incident.
Most claims are filed relatively soon after the treatment or incident in question, but the laws in many states permit claims to be made several years after the alleged incident. This is particularly relevant when minors are involved or when the alleged injury appears much later.
A claims made policy, on the other hand, provides coverage for claims of alleged incidents that both occur and are reported on or after the day coverage begins, but before the policy terminates. (The first day claims-made coverage begins is called the retroactive or "retro" date.)
Claims-made coverage is triggered when the alleged incident occurs on or after the policy's retroactive date and before the policy terminates, and a written claim is reported during the current policy period or during the basic reporting extension period 30-60 days following termination of the policy.
- Occurrence policies offer a steady base premium that does not increase as the policy matures.
- Claims-made policies offer a lower premium during the early years of the policy, which steps up each year until reaching maturity in year five. While this saves some money in your early years of practice, potential coverage gaps can occur.
The choice of an occurrence or claims-made malpractice insurance policy is entirely up to you. Examine your own situation carefully to decide which type of policy may be best for your current financial circumstances.