Claims Made v Claims Occurring – What’s the Difference and How it Affects Different Types of Business Insurance

From our conversations with small business owners and self-employed freelancers, it’s apparent that there is a lot of confusion about some of the technicalities of insurance. One such technicality is the difference between ‘claims made’ and ‘claims occurring’ policies and the different insurance products these apply to.

Here we clarify the difference between the two claims bases to help demystify business insurance and enable SMEs, contractors and the self-employed to make conscious buying decisions.

Some business insurance is on a claims-made basis and some is on a claims-occurring basis

Claims Occurring Basis

Claims occurring business insurance policies cover claims that happen during the period the policy is in force, regardless of when the claim is made. Even if a claim is reported after the policy has lapsed or been cancelled, the insurer will still accept the claim.

Products that follow the principle of the claims occurring basis include Employer’s Liability, Public Liability and Product Liability.

Consider this example of a claims occurring case. An employee becomes ill and it’s proved that the illness was caused by a job he was doing 5 years ago. He makes a claim against the company he worked for at the time and they, in turn, claim on their Employer’s Liability insurance with the insurer they were covered by 5 years ago.

The Employer’s Liability Tracing Office (ELTO) exists to help identify the insurer liable for historic Employer’s Liability claims. You can find out more about ELTO here.

Claims Made Basis

The claims made basis of insurance is a bit more complicated. Insurance written on a claims made basis will only cover claims that both happen and are reported during the period the policy is in force. Provided you keep your policy with the same insurer, you will continue to be protected. However, as soon as you lapse or cancel your policy, your cover stops. If you switch insurance providers it’s important to take the retroactive date into account.

Business Insurance Based on Claims Made

Examples of business insurance policies that are on a claims made basis are Professional Indemnity insurance, Medical Malpractice insurance, Director’s and Officer’s insurance and Legal Expenses insurance.

Retroactive Date

To ensure business customers are protected, most insurers offer claims made policies with a retroactive date. The retroactive date is usually the date on which cover was first started and this means that any claims arising from events that happened after the retroactive date are covered.

Here’s an example to explain how it works. Your first insurance policy started on the 1st April 2018. You switch to a new insurer but keep the 1st April 2018 as your retroactive date. This means that you are covered should any claims arise from that date onwards.

The same retroactive date is then carried forward at each renewal. It’s important to know if the insurance you have in place is on a claims made basis so that if you switch insurers you start the new policy using the same retroactive date. This ensures you are protected for any claim that might arise.

If your retroactive date goes back a few years, it’s likely that your insurance will cost a bit more. However, it’s important that you cover these past years so that you are insured if a claim is made that relates to an event that happened before the current insurance term started.

Run Off Cover

If you close your business, for example if you are retiring, you will need to buy run off cover. Run off cover will protect you if any claims arise as a result of activities you undertook before closing the business.

Insurance from Tapoly

Tapoly offer Professional Indemnity insurance, Director’s and Officer’s insurance, Public Liability, Employer’s Liability and Legal Expenses insurance for small businesses, sole traders, freelancers and the self-employed. We also offer Medical Malpractice insurance for doctors, dentists, nurses and other medical professionals. Find out more and get a quote today.

If you would like to discuss your options or have any questions, please get in touch with the Tapoly team. You can email us at, call our helpline on +44 (0)207 846 0108 or try out our chat on our website.