Below is the difference between the two main types of Health and Wellness insurance policies; Claims-Made and Occurrence Form. We want to ensure you have the proper Insurance Advantage. Years of insurance knowledge gives us the expertise in the beauty insurance industry. By ensuring you have the best coverage, we give you the protection advantage. Using our industry knowledge, we then shop to get you the best premiums. We want to pass that information on to our clients. You should make sure you understand how your insurance policy works and what it covers.
Claims-Made and Occurrence Form Insurance Policies
Of all the different types of insurance in the world, Claims-Made and Occurrence Form policies are probably the most difficult to understand and explain. For most brokers in Canada, 99% of what they deal with on a day to day basis is “occurrence form” for general liability insurance coverage. Our insurance expertise is in professional liability, errors and omissions or directors’ and officers’ policies. We are experts in understanding and explaining both types of coverage. As a consumer, you need to make sure you understand the difference. If you need assistance, your insurance broker is always available to help.
The most common form of insurance is an Occurrence Form. This type of insurance would cover your home, car, builders, plumbers and almost every other business in Canada. An Occurrence Form policy will cover you for an incident that occurs during the policy period while the insurance policy is in force. It will be covered by that policy, regardless of how many years later you report the claim. In other words, if you injure someone during your profession and you had an insurance policy in force at the time of treatment, any future claim against you will be covered. For example, if you inadvertently used a bad batch of Botox and the client developed complications and submitted a claim two years later, you would be covered. Even an insurance claim filed ten years later would be covered. The insurance policy would not cover incidents if they occurred before the Occurrence Form policy was issued.
Claims-Made policies are the norm and almost always associated with professional liability, boards of directors, engineers and medical/health business and professionals. Each medical or health profession has a specific name for their professional liability insurance. Doctors call it medical malpractice insurance. Most other health professionals (RMT’s, physiotherapists, etc.) call it professional liability insurance (PLI). Yet, other professionals call it errors and omissions insurance (E&O). Only professional liability policies offer these two different types of coverage, and then only specific industries use the Claims-Made” format
A Claims-Made policy is a common form of coverage for beauty professional liability policies. It covers any claims that occur and are reported while the insurance policy is in force. In other words, it will ONLY cover claims that happen during the policy term. Using the Botox example above, if an esthetician used a bad batch of Botox and the client developed complications two years later, you must have maintained a Claims-made” policy for the two years after the incident. The insurance policy must be in force when you report the claim to the insurance company. If you had any lapse of coverage or stopped paying because your retired or stopped working, you would not have any protection under a Claims-Made policy.
Unlike the Occurrence Form above, you can sometimes purchase coverage for prior acts if you are buying someone else’s business. On the downside, you MUST maintain continuous professional Liability coverage during your career and even for a few years after you retire to protect against unknown claims that show up after you retire or are no longer employed.
Claims-Made policies are generally cheaper and more readily available for specific business segments such as professional liability for the Health and Wellness industry.
Both policies have their advantages and disadvantages. Understanding which one you are buying is essential. Please see our definitions section for more information on Claims-Made and Occurrence Form of insurance policies. Let your insurance expert assist you in making the choice that gives you the Insurance Advantage!