Claims-Made Vs. Occurrence Insurance – A Dance With Risk

Insurance Basics

There’s a story here, and like most stories, it’s one of choice, risk, and understanding. This is a story about two insurance approaches that are fundamentally different. They’re like two different dance moves, each with its own grace and style.

The Dance of Claims-Made

Imagine you’re on a dance floor, and there’s a spotlight on you the moment you make a step. In that spotlit moment, the dance move you make is captured and defined.

Claims-made insurance is just like that spotlighted dance move. It’s all about the moment a claim is made. It doesn’t matter when the event that caused the claim happened; what matters is when you report it.

Picture this: You buy a policy that lasts for one year, and during that year, someone slips on a wet floor at your business and breaks an arm. If the person makes a claim against you three months after the policy expires, and you had a claims-made policy, you’re in a tough spot.

The spotlight has moved, and that dance move is lost to the shadows. Unless you’ve bought extended reporting coverage (a tail), you may have to cover the claim yourself.

Claims-made insurance often costs less and is more adjustable. It’s a dance that’s all about timing, grace, and the perfect spin at the exact right moment

The Waltz of Occurrence

Now, imagine a different dance entirely. This is a waltz, a dance that lingers, smooth, and encompassing. This is occurrence insurance.

In this dance, what matters is not when the claim is made but when the event that caused the claim occurred. If it happened during the policy period, you’re covered. It doesn’t matter if the claim is made years later; the dance lives on.

Consider again the wet floor scenario. If the person who slipped makes a claim three years later and you had occurrence insurance, you’re still covered, even if your policy has long since ended.

Occurrence insurance is like a flowing, timeless waltz. It’s often more expensive and less flexible, but it gives you peace, a dance that you can always return to.

Finding Your Dance

You might be wondering, “Which dance is mine? The timing and precision of claims-made? The smooth waltz of occurrence?”

That’s where the choice and the understanding come into play. It’s about knowing the music that’s playing, the floor you’re dancing on, the risk you’re willing to take.

  • For Small, Nimble Players: If you’re a small business, or if you’re operating in a field with low risks, the claims-made policy might be your dance. It’s cheaper, more adjustable, but requires you to be on your toes, ready to move with the spotlight.
  • For the Long-Term Waltzers: If you’re in a profession where claims might come up years later (like healthcare or construction), then occurrence might be your dance. It’s the waltz that keeps on waltzing, long after the music has stopped.

The Lesson of the Dance

Insurance isn’t a one-size-fits-all proposition. It’s a choice and a dance that requires understanding, timing, and sometimes, a bit of grace.

Be aware of your dance floor, know the moves you’re comfortable with, and dance with confidence.

In this complex world of risks and choices, understand that these two dances – claims-made and occurrence insurance – are your partners. Embrace them, learn their rhythms, and let them lead you to safety, security, and peace of mind.

Choose wisely, dance beautifully, and let the dance of insurance take you where you need to go. Because every dance, no matter how intricate, is a step toward understanding, a movement towards clarity, a leap towards grace.

That’s the dance. That’s the choice. That’s the subtle shift. And now, dear reader, the dance floor is yours.

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