An occurrence based policy is one in which the insurance company that was providing the insurance policy at the time the event occurred, is responsible for defending a covered suit. For example, you have coverage with Insurance Company A from January 1st 2019 to December 31st, 2019 and you switch coverage to Insurance Company B on January 1st, 2020. On February 1st, 2020 a suit is received based upon a slip and fall that happened in June of 2019. Is it Company A’s responsibility who provided the policy on the date the slip and fall happened to respond or Company B who is providing coverage now?
Typically a General Liability policy is an occurrence based policy, so it would be Company A’s responsibility to defend it even though they are not providing coverage any longer. On the flip side, a claims made policy is one in which the insurance company who is providing coverage when the claim is made is responsible for defending a covered suit. Same scenario as previous, except instead of a slip and fall, the board made a decision in June of 2019 that an owner didn’t like, but they didn’t file a suit until February of 2020. It would be Insurance Company B’s responsibility in most situations to respond, because although the decision was made during the prior year, being a claims made policy, Company B is the insurance company providing coverage when the claim was filed. Most professional liability policies are claims made policies.
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