INNOVATION July-August 2017

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Claims-Made vs Occurrence-Based Coverage Why Does the Difference Matter?

Benjamin Kent, B.A., CIP

2005, when the claim was said to have occurred. In the current year—2015—they have switched carriers and gone with Insurer B. It is now the responsibility of Insurer B to pick up all past liabilities subject to the applicable retroactive date. If the policy is cancelled or lapsed, no coverage could be afforded (depending on the particular policy). Occurrence coverage and claims-made coverage provide two different types of insurance coverage that every professional needs to understand. v For more information, contact: Marsh is one of the Marsh & McLennan Companies, together with Guy Carpenter, Mercer, and Oliver Wyman. Copyright © 2017 Marsh Inc. All rights reserved. The opinions contained in this article are those of Marsh and not necessarily those of APEGBC. This article is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Any statements concerning actuarial, tax, accounting, or legal matters are based solely on Marsh’s experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, accounting, tax, or legal advice, for which you should consult your own professional advisors. Ben Kent B.A.CIP, Client Executive Marsh Canada Limited - Vancouver Direct 604.692.4838 Mobile 778.228.6709 Email: Benjamin.Kent@Marsh.com

While most general liability policies are written on an occurrence form, professional liability policies are always written on a Claims Made form. Recently, it has become clear to me that many professionals do not understand the difference and, based on my experience, this is something every professional needs to understand due to the very serious coverage issues it can lead to. So what is the difference? Occurrence Coverage Most general liability policies are written on occurrence forms. They cover claims or suits seeking damages for bodily injury or property damage caused by an occurrence said to have been a result of the insured. The unique part of the occurrence form is that the insurance policy in place when the claim was said to have occurred will respond. In our example, if the insured had their general liability coverage with Insurer A in 2005 (when the claim was said to have occurred), but now in 2015 is currently insured with Insurer B, Insurer A would still be responsible for defending the insured in the action. The primary advantage of occurrence policies is that they cover claims that arise after the policy has expired and will continue to do so indefinitely. Claims-Made Coverage A claims-made policy, as the name would suggest, provides coverage when the claim is made. In the previous example, the insured had coverage with Insurer A in

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