Claims-Made Policy vs. Occurrence Policy for Liability

Keeping track of complex insurance jargon and filing claims can feel stressful. For example, do you know the difference between claims-made policies and occurrence-based policies?

At GuideStone^®, we want to help guide and equip you to understand property and casualty policies as you make decisions for your ministry. Here are the main differences.

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 Since the claims-made policy is no longer in effect, Pastor Paul is liable to pay for damages himself instead of his old insurance carrier.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 whether the incident will be covered. This clarity allows your ministry to be protected with lessened financial impact and minimized burdens.

Claims-Made Policy: What to Look for on the Declarations Page

If you look at the declaration pages from your commercial liability insurance policy, claims-made liability policies will generally be easy to find. It’s frequently listed at the top of the first declaration page, stating “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

Occurrence Policy: Protection for Years to Come

Occurrence coverage can help protect your ministry from legal action for years to come, regardless of when a claim is filed.

Need more guidance for property and casualty needs?

At GuideStone, we come alongside you with property and casualty resources, including a guide to church volunteer management and tips to help prevent discrimination and harassment. For a risk assessment or more information, contact us at InsuranceSolutions@GuideStone.org or (214) 720-2868, Monday through Thursday, from 7 a.m. to 4:30 p.m. CT and Friday, from 7 a.m. to 4 p.m. CT.

This article is for informational purposes only. It is not intended to be construed as legal advice. Readers should use this article as a tool, along with best judgment and any terms or conditions that apply, to determine appropriate policies and procedures for your church's risk management program.

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