Occurence Policy Law and Legal Definition

Occurrence policy is a form of professional liability insurance coverage that protects a policyholder for alleged acts of malpractice which occur while his/her policy is in force. Pursuant to the occurrence policy, an insurance provider is liable for any claim which occurred during the policy period no matter how far in to the past it occurred.

Occurrence policy covers claims that arise out of damage or injury that took place during the policy period, regardless of when claims are made. For example, A buys a policy in 1999, treat client B in 2002 and terminate the policy 2004. In 2009, client B sues A for an incident that occurred in 2002. A is covered by the policy because A was insured when s/he treated client B. The fact that A does not own a policy while the suit is brought is irrelevant. Therefore, an occurrence policy protects the policy holder from any incident occurring while the policy is in force.

Occurrence liability is a traditional type of liability policy. It has now lost favor because many lawsuits are brought years after the incident. Large liability risks are now generally covered by claims made policies. Under claims made policies, the insurance provider is responsible only for claims submitted during the covered policy period. The difference between an occurrence and claims made policy is discussed in Appalachian Ins. Co. v. Liberty Mut. Ins. Co., 676 F.2d 56 (3d Cir. Pa. 1982). Under an "occurrence" policy the insured is indemnified for acts or occurrences which take place within the policy period while under a "claims made" policy the insured is indemnified for claims made during the policy period regardless of when the acts giving rise to those claims occurred [Appalachian Ins. Co. v. Liberty Mut. Ins. Co., 676 F.2d 56 (3d Cir. Pa. 1982)]