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Claims Made vs. Occurrence


Occurrence

An occurrence policy covers any claims that occur during any policy year. The only trigger for occurrence coverage to apply is the incident must have occurred during the policy year.


Claims Made

A claims made policy covers any claims brought during the claims made policy period. There are two triggers for claims made coverage to apply. The incident must have occurred on or after the policy retroactive date and it must be reported during the policy year.

The average time to report a medical negligence claim is approximately two years, requiring a tail or reporting endorsement to be purchased to provide coverage for claims which have occurred but are not yet reported if the insured is nonrenewed or decides to change carriers.

The cost breakdown for this coverage is:

  First year:

25% of the cost of an occurrence policy

  Second year:

47.5% of the cost of an occurrence policy

  Third year: 67.5% of the cost of an occurrence policy
  Fourth year: 85% of the cost of an occurrence policy
  Fifth year:

95% of the cost of an occurrence policy