Claims Made vs. Occurrence: A Closer Look at Coverage Forms

There are two forms of professional liability coverage available to physicians, surgeons and dentists: claims made and occurrence. When these two types of policies are kept in continual force, the coverage they afford is basically identical. However, their principle differences lie in the protection they provide after they are cancelled and their pricing structure.

Both types of coverage have primary policy limits of liability available in amounts up to $1.3 million/$3.9 million (each person/annual aggregate) for physicians and surgeons, and and up to $2 million/$6 million for dentists.

The occurrence form of coverage protects a policyholder for alleged acts of malpractice that occur while the policy is in force, no matter when a claim is reported to the company.

By way of example, let’s consider a physician who had an occurrence policy in continuous force from July 1995 until July 2000, at which time he moved out of state and cancelled his policy. In 2002, a claim is brought against the physician for treatment he provided in 1998. Although the claim is brought two years after he cancelled his policy, the physician would be covered for the claim, because in 1998 his occurrence policy had been in force.

Claims Made
The claims made form of coverage protects a policyholder for alleged acts of malpractice, which both occur and are reported to the policyholder’s insurance company during the time the policy is in continuous force, or reported within 60 days following their cancellation or non-renewal. Note: this basic extension of the reporting period gives policyholders an extra 60 days beyond their cancellation or non-renewal date in which to report claims based on incidents that occurred when the claims made policy was in force.

For this example, let’s consider a physician who had a claims made policy in force from July 1995 until July 2000, at which time he cancelled the policy. In 2002, a patient brings a claim against him for a treatment he provided in 1998. In this instance, even though the incident occurred during the time the claims made policy had been in force, because the claim was brought two years after the policy’s cancellation, the physician would not be covered for this claim (unless he had reported the incident to his insurance company prior to cancellation, or within 60 days following the policy’s cancellation or non-renewal).

Stay tuned to the MLMIC blog for future posts on occurrence vs. claims made coverage, including price comparisons between the two.