Is it better to have claims made or occurrence insurance?
Claims-made coverage is portable. You can take the coverage from one insurance company to another. The advantage to an occurrence policy is its permanence. The period of time you are insured under an occurrence policy is protected forever by the policy you had that year.
Occurrence policies provide the best protection and, though somewhat more expensive than claims made policies, offer long-term peace of mind. Unfortunately, they are becoming increasingly hard to find. Claims made coverage, by contrast, will only apply if the claim is made while the policy is still in effect.
First, claims made and reported policies are generally less expensive than occurrence policies because claims made carriers can more accurately predict the frequency and severity of claims that will be reported during the policy period.
Because the acts taking place during an occurrence policy are normally covered regardless of when the 'claim' is made, coverage for acts taking place during the policy period remains in place even after the occurrence policy expires or a switch is made to a claims-made policy.
The most obvious benefit of an occurrence policy is that it offers long-term protection. As long as coverage is in place when the incident occurred, it's possible to make a claim on that period years into the future. Another advantage is that occurrence policy costs tend to be fixed.
An occurrence policy provides coverage for incidents that happen during your policy period, regardless of when you file a claim. These policies can be more expensive than a claims-made policy because of how long coverage applies.
Essentially, for a claim to be considered for coverage, an occurrence-based policy needs to be active when the act or incident occurs; claims made policies have to be active when the claim is made.
Health insurance is a critical piece of every financial plan. An unforeseen diagnosis or a major accident can leave you with a six or seven-figure medical bill.
What Is a Claims-Made Policy? A claims-made policy refers to an insurance policy that provides coverage when a claim is made against it, regardless of when the claim event occurred. A claims-made policy is a popular option for when there is a delay between when events occur and when claimants file claims.
Life insurance will help provide financially for your survivors. Health insurance protects you from catastrophic bills in case of a serious accident or illness. Long-term disability protects you from an unexpected loss of income. Auto insurance prevents you from bearing the financial burden of an expensive accident.
What triggers a claims-made policy to respond to an occurrence?
In the case of a claims-made policy, however, determination of coverage is triggered by the date you first became aware and notify the insurer of a claim or potential claim. The insurer's policy in force on the date you became aware and give notice is the insurer who must defend and settle the claim.
An occurrence-based policy covers losses that happen during the time you have the policy, regardless of when you file a claim. It is designed to protect you against long-tail events – incidents that could cause injury or damage years after they occur.
Tail coverage only applies to a claims-made policy. It extends the amount of time a claim can be brought against you and reported. Because it doesn't matter when a claim gets filed with occurrence insurance, as long as the loss occurred during your policy period, tail coverage isn't necessary.
A per-occurrence deductible means you're responsible for paying a predetermined deductible each time you file an insurance claim.
For example, say your policy's per-occurrence limit was $1 million and the aggregate limit was $2 million. Your company gets sued on two separate occasions in the same year, each time for $1 million. Because your per-occurrence limit is $1 million, both lawsuits will be covered.
- American Family: Overall Pick for Paying Claims.
- State Farm: Our pick for new homeowners.
- Allstate: Our pick for extended coverage.
- Liberty Mutual: Our pick for discounts.
- Progressive: Our pick for bundling.
When you've had multiple claims, your rate may increase, even if you weren't at fault in the accident (depending on your state and your insurer). While an insurer can't cancel your policy mid-term if you've made multiple claims, they may choose not to renew your policy.
In terms of number of policies settled during 2022-23, Max Life Insurance has the highest claim settlement ratio of 99.51%. With a 99.39% claim settlement ratio, HDFC Life Insurance came second on the list. Aegon Life Insurance bagged the third position with a 99.37% claim settlement ratio.
Only claims-made insurance policies have retroactive dates. These policies honor claims only if both the incident and the lawsuit occur while the policy is active. Policies like general liability insurance or commercial property insurance have other ways of determining whether a claim is timely or not.
Defined Events Coverage
Unless the policy specifically defines a damage-causing event, no coverage will be rewarded to the claimant. Avoid policies in which the defined events are limited, improbable or irrelevant to your situation.
Which insurance policy is most useful?
If budgeting is your biggest concern, term life insurance may be the best choice. If you have many dependents, whole life insurance may be a better route. However, if financial planning and cash value are most important to you, universal life insurance may be a strong option.
Health insurance takes the lead as one of the most crucial forms of coverage. It ensures that you have access to necessary medical care without the burden of exorbitant expenses.
Claims-made coverage is portable. You can take the coverage from one insurance company to another. The advantage to an occurrence policy is its permanence. The period of time you are insured under an occurrence policy is protected forever by the policy you had that year.
A claims-made policy provides coverage that is triggered when a claim is made against the insured during the policy period, regardless of when the wrongful act that gave rise to the claim took place.
Northwestern Mutual is the largest life insurance company, according to 2022 NAIC data, holding a little over 7 percent of market share.
