Difference between claim based and occurrence based commercial insurance policy

Difference between claim based and occurrence based commercial insurance policy

When you plan to get a commercial insurance for your business then most of the times you have apply for claim coverage, because they are cheap as compare to their counter part occurrence based insurance coverage.


Many insurance agents never mention you complete difference between a claim based and an occurrence based commercial insurance. If you look at the rates of both the policies mode, then you will realize that an occurrence based insurance coverage is more costly then a claim.

If you look further for the facilities which are provided by a claim and occurrence based policies then you will realize that claim policy covers only a narrow range of the liabilities as compared to the occurrence based policies.

It should be the responsibility of the insurance agent to guide you correctly but they only pay attention towards their commission and does not provide you right and relevant information for the selection of mode of payment and basic requirements for a insurance.

If a defective product is distributed in market and then customers report the claims for the bodily injury or property damages then a claim and occurrence based policy follows different procedures.

A claim policy only provides you coverage till you are paying premium and after that if any claim is made then it should not be paid by insurance company. While in occurrence based product liability insurancepolicy the range of coverage is vast and after the end of premium payment period you can get the benefits of the policy.

Mostly it depends on the time interval of the because when you take a product liability insurance then product is the main object which needs coverage and as time goes their will be more products in the market and chances of injury or body damages increase day by day, claim based may prove to be costly at this time because as the batches are distributed in market product number will be raised and you have to pay more money to get the benefits from claim based policy.

And that is the reason why a claim based becomes more costly then an occurrence based policy.

Claim based policy only offer coverage till the is in premium terms and after that it is not the responsibility of the insurance company to pay money for any claim made by you in reference of a customer’s feedback towards your product.If a claim is made after coverage period then there is a risk of cancellation of claim by the insurance provider.

We take an example to explain claim based in detail, if you are running a business in which you distribute product in market, and for that time there was no problem faced by any customer but if in future say 3 years a complaint is reported by your customer for the damages after the use of your product then if the coverage period was over then you cant the benefits from the insurance company, and you have to compensate this damage from your personal fund.

By Jade Scheffer

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