Claims-Made Liability Policy vs. Occurrence Liability Policy

Know the Difference and Make a Smart Coverage Decision

Filing an insurance claim may be overwhelming — and keeping track of the complex insurance jargon on top of that can contribute to that stress. For example, do you know the difference between a claims-made policy and an occurrence policy? A question like this might cause some head-scratching, and understandably so.

At GuideStone Property and Casualty^®, we want to help guide and equip you to make the best decision for your ministry, which is why we want to explain both claims-made and occurrence liability policies. So, what is the difference between the two policies?

Claims-Made Policy

A claims-made policy provides coverage for claims that occur — and are reported — within the specific time frame set forth by the policy. This means that if your policy is canceled or a premium isn’t paid, any claim that comes through will not be covered, even if the covered incident occurred during the period when your policy was active. A claims-made policy only covers incidents that happen and are reported within the policy’s timeframe unless a tail (or retroactive) coverage is purchased. *

Example: Pastor Paul purchases a claims-made liability policy for his church in 2012, continues coverage through 2014 and then cancels the policy. In 2021, Pastor Paul is sued for an incident that occurred in 2013. Since the claims-made policy is no longer in effect, Pastor Paul is liable to pay for damages himself instead of his old insurance carrier.

Occurrence Policy

An occurrence policy provides coverage for covered incidents that occur during the policy period, regardless of when the claim is filed. This form would cover losses even if the claim comes in after the policy is canceled as long as the covered incident occurred within the timeframe of the initial coverage. An occurrence policy has lifetime coverage for incidents that occur during a policy period but can be reported outside of the policy’s timeframe.

Example: Minister Mike purchased an occurrence policy for his ministry in 2012 but switched to a new insurance provider in 2017. Minister Mike is sued in 2021 for an incident that occurred in 2014. In this instance, he is still covered by his original occurrence policy because it was active at the time of the incident. The coverage would fall under the policy he carried during the time the incident occurred.

The main difference between claims-made and occurrence policies is how the coverage applies —knowing when your policy is effective and when it expires determines if the incident will be covered or not. This clarity allows your ministry to be protected with lessened financial impact and minimized burdens.

Claims-made liability policies will generally be easy to find if you look at the Declarations pages from your Commercial Liability Insurance policy. It’s frequently listed at the top of the first Declaration page with the words “This is a Claims-Made Policy.” It is also found in what is often called “Professional Liability,” or the liability assumed because of a profession. In the ministry context, we generally see this in the following six types of liability:

Employment Practices Liability
Directors and Officers Liability
Employee Benefits Liability
Counseling or Pastoral Professional Liability
Cyber Liability
Sexual Acts Liability

At GuideStone^®, through our alliance with Brotherhood Mutual Insurance Company, all liability policies are written as occurrence forms. We exclusively provide occurrence coverage because this coverage applies purely for the ministry’s benefit. Our goal is to keep your ministry protected from legal action for years to come, regardless of when the claim is filed. In partnering with us, you experience an insurance provider who understands and provides coverage to help protect your ministry from specific issues that you may face.

If you have questions about your current policies, please reach out, and we will be happy to find out what type of coverages you currently have and advise you on the next steps. Visit us at GuideStonePropertyCasualty.org/SafetyToolKit or give us a call at 214-720-2868.

*Tail coverage can be purchased from the company offering claims-made to extend the reporting period.