It might surprise most Americans to know that small business is anything but. In fact, 99.9% of businesses are small. That’s tens of millions of entrepreneurs who need the right kind of insurance to get their doors open and keep them that way.
Commercial general liability insurance is a great start, regardless of what industry you’re in. But when it’s time to choose between claims made vs. occurrence policies, how can you tell which is right for you? Let’s explore.
Claims Made vs. Occurrence Policies - Finding the Best for Your Business
For the last 54 years, Pepper, Johnstone & Company—an independent insurance brokerage—has advised small business owners on the best policy for their specific needs.
If you’ve been baffled by terms like “claims made” insurance or “occurrence based” insurance, you’re not alone. Let’s explore the strengths, weaknesses, and nuances of both policies.
What is Claims Made Insurance?
The term “claims made insurance” refers to how your business reports and receives assistance for insurance claims during your policy period. For those with claims made insurance, claims need to have occurred and been reported within the policy effective period.
A commercial general liability policy might cover claims like:
- Personal injury
- Property damage liability
- Advertising injury
- Bodily injury
Under a claims made policy, business owners will need to file a claim within so many days after an incident occurs; otherwise, the incident may not be covered. That said, tail coverage can help.
What is Tail Coverage?
Tail coverage (also called an extended reporting period) is a form of additional coverage. Tail coverage extends the reporting period for claims made policies beyond the normal 12-month policy period up to the expiration date of the tail coverage purchased.
What is Occurrence Insurance?
While claims made insurance relies on a reporting window after incidents occur, occurrence insurance allows small business owners to file claims at any point during their policy period.
Better still, occurrence insurance often comes with a kind of tail coverage built in—you can still file claims even after your policy has expired. The caveat is that the claim must have “occurred” while the policy was enforced.
Which is Better for My Business - Claims Made or Occurrence?
The better policy for your business comes down to numerous specifics and circumstances. At first blush, the primary difference between the policies is expense.
Because of its flexibility, occurrence insurance is generally more expensive than claims made (upwards of 33% more expensive at that). But of course, claims made insurance demands a timely filing or you may risk your coverage.
Ultimately, what works for general contractors may not work for tech startups. Thankfully, an independent insurance broker can take your specific circumstances into account. By speaking with you about your business, Pepper, Johnstone & Company can pair you with the right policy at the right cost.
Find a Claims Made or Occurrence Policy for Your Business Today
The numerous options and policy details of business insurance can be dizzying, but thankfully, you’re not alone. At Pepper, Johnstone & Company, we’ve been doing this for more than half a century, matching your needs with the right policy at the right price.
To learn if claims made or occurrence insurance is right for your business, call Pepper, Johnstone & Company today at 866-872-0431 in Athens, AL, or 866-872-0431 in Huntsville.
Find the Right Coverage for Your Small Business in Alabama
Small businesses are the backbone of the American economy. To protect Alabama’s entrepreneurs, Pepper, Johnstone & Company searches through nearly countless policy options to find the right one for every business. Get the conversation started today by contacting us.