What is the primary difference between claims-made liability coverage and occurrence liability coverage?

The primary distinction between claims-made liability coverage and occurrence liability coverage lies in the timeframe in which claims can be filed.

Claims-made liability insurance provides coverage for claims that are made during the policy period, regardless of when the incident that led to the claim occurred, as long as the event took place after the policy was enacted. This means that if a claim arises but is reported after the coverage has ended, it may not be covered unless an extended reporting period is available or purchased.

On the other hand, occurrence liability coverage provides protection for incidents that occur during the policy period, regardless of when the claim is filed. This means that claims made years after an incident can still be covered if the incident occurred while the policy was in effect.

Understanding this distinction is crucial for policyholders when assessing their insurance needs and the specific protections that each type of coverage offers.