occurrence policy
Definition
An occurrence policy is a type of insurance that covers you for any incident that happened while your policy was active, even if you no longer have that policy when someone files a claim against you. So if a customer slips in your store in 2023 while you have this policy, but they don't sue you until 2025 after you've switched insurers, your 2023 policy still has your back. This is the opposite of a claims-made policy, which only covers you if both the incident and the lawsuit happen while you're still paying for that specific policy.
Example
You run a catering business in 2022 with an occurrence policy, and a guest at an event gets food poisoning but waits two years to sue you. Your 2022 insurer is still responsible for defending you and covering any damages, even though you switched insurance companies in 2023.
Watch Out
Occurrence policies typically cost more upfront than claims-made policies, but that higher premium buys you lasting protection that follows you long after you've moved on to a different insurer.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.