Occurrence insurance policies cover all claims for events occurring during the period of coverage, even if those claims are filed after the policy ends.
Occurrence insurance is the most extensive form of coverage. It is also the most costly for the insured. This is because a lot of time could pass between the policy period and the filing of the claim, and an occurrence policy would cover the claim regardless.
For example, imagine an occurrence policy ran from 2015 to 2018, and an incident occurred on December 31st, 2018. However, the patient didn’t file a malpractice claim until January of 2020. The original insurance provider would still have to cover the claim. This is different from claims-made policies, which will only cover a claim if it’s filed while the insurance policy is still in effect.
Occurrence limits refresh every year. This means that the amount paid for claims in one policy year doesn’t affect the coverage of claims in other years. Under an occurrence policy, each year represents an independent limit. This prevents claims in one policy year from destroying funds available to cover the other years.
Occurrence premium costs vary from state to state. They depend on the malpractice laws within a state and the frequency of lawsuits in that state. For this reason, some states, like New York, have higher rates, while others, like Texas, tend to be cheaper. Rates can also vary on a more local level; physicians who practice in urban areas can pay higher rates than those in rural counties.
For occurrence insurance, physicians pay the full "mature" yearly rate immediately. A mature rate means that the amount you pay doesn't rise or fall as time passes. If you started your occurrence policy at a premium of $20,000, for example, that will be your rate for future years as well.
Occurrence policies, though expensive, offer a lot of protection. They cover claims about events that happened during the policy period, even if they are filed after the policy ends. The limits of an occurrence policy reset each year, keeping claims in one year from depleting resources in another.
Want to know more about occurrence policies? Capson can help you decide which type of policy is a good fit for your needs and budget. We help clients across the U.S. and can get you or your practice insurance in as soon as 2 days. If you’d like a free quote, complete our form or contact us now.