Claims Made Insurance
Claims made insurance is different than time of occurrence insurance. Time of occurrence is where the person you were insured with at the time of the occurrence is the company who pays. When you purchase claims made insurance, you are insured by the company you are paying your premiums to at the time the claim is made.
However, this can be a little more complicated than this because most insurance companies do like to make sure that they are liable only for those events that occur during their property damage insurance or any other policy period. That way, anything that occurred prior to that period is not their responsibility.
In the case of claims made insurance, it is insurance that pays regardless of when the accident happened, but for a valid claim that is made during the current policy. When you know that an accident has occurred within your business because an accident report was filed and you switch companies, having claims made insurance is very important. The individual who was injured can file a claim against you at any time.
The claims date is the date in which you actually become aware of a claim as opposed of when it happens. You do not even have to be served with the legal papers yet, as long as you know and you notify the insurance company of this claim.
Here is an example: If an accident occurred within your business in 2007 and the injured party filed an accident report with you, you are aware of the occurrence. In 2008, you changed insurance companies or you acquired insurance for the first time. In 2010, the person then comes forward with medical expenses and other damages that were incurred as a result of the accident.
You then receive notification that a claim has been filed against you. This is when you need to call the insurance company as soon as possible. That way they are aware of the claim as well, which is very important for you in ensuring that your claim is covered.
The complexity of claims made insurance is what tends to be a turnoff to people, but it can be the difference between being covered and not being covered when you need it the most.
The retroactive date is a date that you can move back to a specific date. Most insurance companies will move this date forward, but you want to move it back to make sure you are going to be covered for when a claim is made. When switching companies this is very important. Don't let the retroactive date be advanced and don't change it once you have it where you want it because you never know when a claim is going to be made and you're going to need it more than ever.
Keep in mind too that your application becomes a part of your policy and acts as a type of warranty for you when it comes to obtaining coverage. You have to make sure all of your information is correct or the insurance company can void coverage.
All-in-all, claims made insurance can be the difference between losing a lot of money and keeping it. That way you can go on with your business the way that you need to so that you can ensure the livelihood of your employees and your own. You are also helping the sustainability of your company so that you can be around for a very long time. So make sure that when you are signing up for your insurance that you opt for claims made insurance, especially if you have cause to do so.