Claims-Made Policies:
Covers claims that are “made” and reported to the Company while the policy is active
The medical incident must have occurred after the retroactive date shown on the policy
“Step Process” for pricing
Once policy is canceled – Extended Reporting Endorsement (Tail) Coverage is offered
If your new policy is written accepting “prior acts," the Extended Reporting Endorsement (Tail) is not needed
If Tail Coverage is not purchased or prior acts coverage obtained, the carrier will not respond to any claims that arise once the policy is no longer active. Not having tail coverage leaves you and your practice exposed for potential lawsuits without insurance to respond. If you have a gap in coverage, it might be difficult and costly to find coverage in the standard market in the future.
Occurence Policies:
Coverage for claims that occur during the period covered by the policy.
Does not matter when claims are filed – tail coverage is built into the policy.
Pricing varies from claims-made coverage (typically higher due to tail coverage being built into policy)
This policy type is more difficult to find due to less carriers offering this coverage.
As the healthcare industry changes, exposures change as well. Carriers respond to these changes by adding new coverages into their policies. With an occurrence policy, if a claim is made for an occurrence that happened on an old policy, the carrier will respond to the claim with the policy features and terms for that specific policy, compared to a claims-made policy which would respond with the most up-to-date coverage terms and features.