Occurrence Coverage

There are two basic types of medical liability insurance coverage: occurrence and claims made. Occurrence policies cover all claims that arise from events that take place during a specific policy period, irrespective of when the claims are reported to the insurance company. Claims-made policies, in contrast, cover only those claims made, or reported, during the given policy's period and arising from incidents occurring during that policy's life. This latter type of policy was designed to limit the exposure of the insurers after the significant rise in medical liability claims in the 1970s. As such, most policies offered today are of the “claims made” type, with a few occurrence-style policies still being offered.

Thus, occurrence policies cover the claim if it occurred during the policy period. This obviates the need for additional coverage by the physician when changing insurance carriers (called “tail coverage”), but, where available, could result in higher premiums because the carrier is trying to minimize potentially large and unpredictable future payouts. Occurrence policies also might prove insufficient to cover awards if the limits were much higher than anticipated at some time in the future. An example of occurrence coverage would involve a physician who performs an emergency hysterectomy for a postpartum hemorrhage; the patient sues the physician for negligence five years after the doctor changes carriers. The insurance carrier at the time of the occurrence of the incident would assume responsibility for handling that claim, including its defense and payout if necessary.