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Claims Made Insurance Explained

Claims Made Insurance

Claims Made Insurance Explained – What It Means For Your Business

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Whether or not your policy will respond to a claimClaims made insurance is one of the two categories that all property and casualty (P&C) policies fall into. Ultimately, the type of coverage your business selects will determine:

  • What your company’s responsibilities will be in the event of a claim
  • How much your premiums will cost, both now and in future renewal periods

Most P&C insurance policies are occurrence policies, which tend to be less complicated. An occurrence policy covers any instance of bodily injury or property damage that happens within your policy period, regardless of the date you submit the claim. This means you could potentially submit a claim years after your policy period ended, as long as the event that triggers the claim occurred during your period of coverage.

One advantage of having this type of policy is that the period of time you are insured is protected “forever” by the occurrence policy you had that year. When your policy period has ended, there is no need to renew the policy or purchase “tail coverage” to cover events from your policy period.  As a business owner, if you face the risk of unknown or unreported claims arising long after your policy period is over, an occurrence policy might be right for you.

Understanding Claims Made Insurance

Claims made policies tend to be more complex than occurrence policies because factors such as “tail coverage” and retroactive dates come into play. Claims made policies only cover claims made during your policy period; it’s unnecessary to determine when the bodily injury or property damage occurred.

What’s advantageous about this type of policy is that your claims today are covered by the policy you have today. This gives you the benefit of purchasing policy limits that correspond with the current economic and legal environment in which your business operates.

The disadvantage of a claims made policy is that if you or the insurer cancels or does not renew the policy, you will have no coverage for claims made after the cancellation or non-renewal date for injuries or damage that occurred prior to that date.

Ask Us If Claims Made Insurance Is A Good Fit For Your Business

Typically for the first five years of coverage, claims made policies tend to be less expensive than occurrence policies. However, as your business faces more exposures, your premiums will increase.  Often after five years, the cost of a claims made policy begins to even out with occurrence policies. The premium cost, amount of coverage and your type business are just some of factors that should be considered when deciding which policy type will best suit your organization’s needs.

An ALIGNED advocate can help you evaluate available insurance options and secure the best products, services and solutions for your business.

To learn more about ALIGNED, our commitment to providing insurance expertise and the best insurance products or solutions, talk to one of our advocates today. 

ALIGNED Across Canada   100% Canadian owned, ALIGNED is a premiere insurance brokerage that serves more than 1,400 clients across the country. ALIGNED’s offices in Toronto, Calgary and Vancouver are supported by a national operations centre in Cambridge, Ontario. Uniquely within the industry, ALIGNED creates, negotiates and delivers the best business insurance and risk management strategies/solutions to organizations like yours.

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