Claims-Made |
Occurrence |
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Limits of Coverage |
If no other coverage (such as Prior Acts and Extended Reporting) is purchased, incidents must occur and be reported while the policy is in force. | Incidents must occur while the policy is in force, but they may be reported at any future time. | |
Prior Acts or Retroactive Coverage |
This additional coverage must be purchased to cover claims arising from incidents that occurred before the policy's actual effective date. | No Prior Acts Coverage is available because the policy will only cover incidents occurring while the policy is in effect, even if a claim is reported much later. | |
Extended Reporting or Tail Coverage |
Tail coverage must be purchased whenever a policy with an insurance company ends. This will ensure that future claims arising from the period the policy was in effect will continue to be covered. | No tail needs to be purchased. Claims that arise from incidents that occurred during the policy period are covered, no matter how far into the future they are reported. | |
Cost |
The cost may be relatively low at first because the policy only covers the entity from prior acts renewals until the potential for claims reaches a plateau.* | Cost may be prohibitively high from the beginning because the entity is paying in advance for any incidents during the policy period that MAY some day turn into claims. | |
| *A time which is established from the insurance company's overall experience. This may take from four to seven years. | To change from claims-made to occurrence coverage may require purchase of an extended reporting endorsement from the claims-made carrier. This can be cost-prohibitive. | ||