Choosing the right malpractice insurance coverage can feel like yet another task on your already packed schedule. At the heart of it, you’ll decide between claims-made or occurrence policies. The key difference? It comes down to when the claim is filed.
Claims Made Policies
Occurrence Policies
Both policies offer protection, but the right choice depends on your career plans and financial goals, also state and specialty availability. Let’s break it down further.
Claims-Made Coverage: Flexibility with Foresight
Claims-made coverage is more like a subscription service. It's active when you need it - covering incidents only if the policy is in effect when both the incident happens and the claim is made.
Claims-made policies are all about timing. To be covered, two things need to happen:
Think of it like a window - it only covers claims reported during the policy period for events that happened after the retroactive date.
Renewing your policy keeps coverage in place for past incidents, as long as your retroactive date remains unchanged.
Advantages:
Considerations:
Let’s say a neurosurgeon has a claims-made policy with limits of $1 million per claim and $3 million aggregate per year. They’ve kept this coverage for five years without gaps.
That’s a key difference with claims-made policies - no matter how many years you’ve had the policy, your coverage is tied to the year the claim is reported, not when the incident happened.
Unlike occurrence policies, claims-made premiums start lower because the likelihood of a claim being filed grows as time goes on. Expect them to increase annually until they reach what’s called a mature premium - typically by Year 7.
Here’s a common breakdown:
Example:
If your mature premium is $100,000 by 2025, your premiums may look like this:
Your retroactive date is one of the most critical details on a claims-made policy. It marks the earliest point an incident can occur and still be covered by your claims-made policy. Think of it as the starting line for your coverage. Any claims from incidents before this date won’t be covered, even if the policy is active when the claim is filed.
It’s a key detail to keep in mind - and one you’ll want to understand as you explore your coverage options.
Tail coverage kicks in when your claims-made policy ends, providing protection for claims filed after your coverage expires. Without it, any claims that surface later would be your responsibility.
You’ll typically need tail coverage when:
Otherwise called Extended Reporting Period (ERP) endorsement, tail insurance is an add-on to your standard policy or purchased separately as standalone tail from a different carrier. It usually costs between 150% and 250% of your final annual premium. So, if your last premium was $100,000, tail coverage could cost anywhere from $150,000 to $250,000.
There are various duration periods of tail, including unlimited. We've created an entire page on tail insurance here.
Prior acts coverage is a lesser-known option that can keep you protected for incidents that happened before your new policy starts - without needing tail insurance. It’s something you’d arrange with your new carrier, making it a useful way to avoid paying for tail coverage from your previous insurer if you had prior claims-made coverage.
However, not all insurers offer it, and eligibility typically depends on maintaining continuous coverage with no lapses.
Think of occurrence coverage as the 'one-and-done' option. Once you have it, you're covered for any incidents that happen (or occur) while the policy was active, regardless of when the claim is filed.
Before the 1970s, occurrence-based policies were the standard in malpractice insurance plans. However, as the number of claims rose and became increasingly costly, insurers shifted towards offering claims-made polices. This change allowed insurance companies to better manage and anticipate potential claims within a more defined time frame.
Occurrence policies offer lasting peace of mind with the right carrier. As long as the incident happened during your policy period, you’re covered - even if the claim is filed years later.
This built-in protection means there’s no need for tail coverage when you retire, switch jobs, or close your practice, presuming you've had occurrence all this time.
Advantages:
Considerations:
Let’s say a general surgeon has an occurrence policy with limits of $1 million per claim and $3 million aggregate per year. The policy is in place for five years.
Since each policy year has its own separate limits, the surgeon could potentially access $1 million per claim from each policy year with up to $3 million in total claims per year. Over five years, this could amount to $15 million in cumulative protection - often referred to as stacked limits.
While occurrence policies often come with higher upfront premiums, their simplicity and long-term protection make them worth it for many doctors.
When it comes to occurrence policies, one thing that often gets overlooked is the long-term stability of your insurer. Since these policies cover incidents that happen during the policy period - even if a claim comes in years later - your insurance carrier needs to be around and financially stable when it’s time to pay out.
While it’s rare, insurance companies can go out of business, and that could leave your coverage in question. If that happens, state Departments of Insurance may step in through state guaranty funds to cover claims. But these funds have payout limits and might not cover the full amount of a large claim. That’s why choosing a financially solid, well-rated carrier is a must with occurrence policies.
The biggest difference between claims-made and occurrence policies comes down to when the coverage applies. Here’s how they compare:
Most claims-made policies follow a “claims-made and reported” model, meaning both the incident and the claim must be reported during the active policy period.
Occurrence policies, on the other hand, come with higher upfront costs but offer the benefit of no tail insurance. They provide ongoing protection for claims that may be filed years later.
If you're looking for lower initial premiums, a claims-made policy may be the most attractive. But keep in mind that you’ll likely need to factor in the cost of tail coverage when you change jobs or retire.
The right choice comes down to your career plans, financial goals, and how long you intend to stay at your practice.
Occurrence policies tend to be more expensive upfront compared to claims-made policies, but the stability and long-term advantages can balance out the cost.
Example: If your policy had a $1 million per claim limit in 2025, that’s the amount available even if a lawsuit is filed years later.
For doctors who prefer fewer administrative concerns and long-term protection, an occurrence policy is often a solid choice, with the right carrier. However, claims-made policies are still the most popular due to their availability and costs.
Your policy limits determine how much your insurer will pay per claim and over a policy period. The key difference between claims-made and occurrence policies is how those limits apply.
Choosing between claims-made and occurrence isn’t just about cost - it’s about what makes sense for your career and financial situation.
Here’s what might tip the scales:
Choosing the right medical professional liability insurance policy isn’t one-size-fits-all. Your decision will depend on factors like where you are in your career, your specialty, and your long-term plans. Both claims-made and occurrence policies offer unique benefits, and understanding how they work can help you find the best fit for your situation.
Ultimately, the right choice is about finding what fits your career goals and keeps you covered, now and into the future.
Choosing the Right Malpractice Policy - We’re Here to Help
Deciding between claims-made and occurrence policies can feel overwhelming, but you don’t have to figure it out alone. At DrsCoverage, we’re committed to making the process easier. Our team takes the time to understand your practice, specialty, and long-term goals to help you find coverage that makes sense.
We work with top A-rated carriers and have access to non-standard markets, giving you more options for comprehensive coverage in your preferred policy type. Our goal is to help you secure the right coverage at a competitive rate.
Whether you’re in a high-risk specialty, have a claims history, or are just getting started, we’ll walk you through your options. From understanding policy limits to planning for career changes, we’ve got your back.
Let’s find a solution that fits your practice.
Reach out today for personalized guidance and competitive quotes - because your focus should be on patient care, not insurance worries.
Claims Made vs Occurrence FAQs
The key difference is when coverage applies.
If you switch from a claims-made policy, you’ll need tail coverage to protect against claims filed after your policy ends. With an occurrence policy, there’s no tail coverage needed.
Yes. If you have a claims-made policy and leave your current role, switch carriers, or retire, tail coverage (also called an Extended Reporting Period endorsement or ERP) ensures you’re protected against claims filed later. Without tail coverage, any lawsuit filed after your policy ends won’t be covered - even if the incident happened while you were insured.Some employers cover the cost of tail insurance, but in other cases, it may fall on the physician. It’s always smart to clarify who’s responsible for tail coverage before signing a contract.
Your retroactive date is the starting point for coverage on a claims-made policy. It’s the earliest date an incident can occur and still be eligible for coverage under your current policy. Think of it as your coverage history marker.
If you maintain continuous coverage and keep the same retroactive date when switching insurers, prior acts insurance will be needed, and thus those policy years will stay protected. However, if your retroactive date is removed or reset, you would lose coverage for past incidents unless tail coverage is purchased. This makes it essential to keep track of your retroactive date when renewing or switching policies, ensuring you remain protected for any prior claims.
It depends on your specific situation. Claims-made policies generally have lower upfront premiums but require tail coverage if you switch jobs or retire. Occurrence policies usually cost more initially but include built-in protection without needing tail insurance.
Your decision may come down to factors like your career plans, financial goals, and how long you expect to stay in one practice. Both options offer reliable coverage - the right choice is the one that best supports your needs.
Get Started - Your Way: You can either schedule a consultation to discuss your needs with a DrsCoverage broker; request a quick quote to begin the process (we may be able to use a recent carrier application for faster turnaround); or email us with any questions. We're here for you.