What is the difference between "Claims made" and "Occurrence" policies?

The distinction between "Claims made" and "Occurrence" policies is significant, particularly in how each type of policy addresses when claims can be made in relation to the timing of the events that trigger those claims.

"Claims made" policies are structured so that coverage applies only to claims that are reported to the insurer during the active policy period. This means that if an incident occurs while the policy is in effect, but the claim is not reported until after the policy has expired, that claim would typically not be covered. Essentially, "Claims made" coverage is about the timing of the claim notification.

On the other hand, "Occurrence" policies provide coverage for incidents that occur during the policy period, regardless of when the claim is filed. This means that even if the claim is made after the policy has ended, as long as the event leading to the claim took place while the policy was active, the claim would be covered.

The correct choice clearly encapsulates this understanding: "Claims made" covers claims filed during the policy period, whereas "Occurrence" provides coverage for incidents that happened during that same period, regardless of when the claim is actually filed. This clarity in policy structure is vital for understanding coverage limits and the protection offered by each type of insurance