Simplifying insurance: what is claims made vs claims occurring

When you’re choosing insurance, you’ll often come across two terms: claims made and claims occurring.

They both refer to the claims basis your insurance policy works on i.e. if a claim might be covered based on when the claim is made versus when the incident took place.

They might sound technical, but understanding the difference is really important – it can affect whether you’re covered when something goes wrong. The good news is getting your head around what both terms mean is probably easier than you think.

In this guide, we’ll break it down in simple terms, with examples you can relate to – whether you’re on-site or in office.

Disclaimer: this is a general guide relating to insurance. Always check your policy documents and schedule for exact coverage details. If you’re unsure, always check with your insurance provider for confirmation.

Quick answer: what’s the difference between claims made vs claims occurring insurance?

For those wanting a straight answer, both refer to the claims basis of a policy, determining the criteria for a claim to be valid:

• Claims made basis = can cover you if the claim is made while your policy is active (even if the incident occurred before the policy started)
• Claims occurring basis = can cover you if the incident occurred/work was completed during the insurance period (even if the claim is made later, after the policy ended)

The key difference: one covers you if the claim is reported during the policy period and the other covers you if the incident occurred during the policy period.

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What is claims made insurance?

A policy written on a claims made basis can pay out for any claim notified to insurers during the period of insurance, even if the incident happened earlier (before the policy started).

A claims made policy only covers you if:

1. The work/incident happened after your retroactive date
2. The claim is reported while your policy is still active

What is a retroactive date?

A retroactive date is provided where your policy offers retroactive cover – meaning you can be covered for work completed before your policy started, as long as the claim is made while the policy is active (i.e. on a claims made basis!).

Normally associated with professional indemnity (PI) insurance, a retroactive date defines how far back your insurer will cover you for past work.

Retroactive date example

Assuming a currently active policy has a retroactive date of 12th March 2023:

• If the claim relates to work completed in May 2024, you could be covered
• If the claim relates to work completed in September 2022, you won’t be covered

You can check out our guide to retroactive dates for a full run down of what they are and how they work.

An example of claims made

A business is sued for professional negligence in relation to a project they worked on in June 2024:

• If their policy is currently active and has a retroactive date that’s before June 2024, their insurer may cover them for the claim
• If they cancelled their policy or the retroactive date is after June 2024, they won’t be covered

It’s important to note that if you change insurer, you may lose your original retroactive date. It is possible to transfer it but you need to make your new insurer aware of your current retroactive date and get confirmation that they’ll honour it.

What to check before switching insurers

Switching insurer may create gaps in cover if you don’t manage it carefully. Before cancelling an existing policy, you should think about the following:

• Check the retroactive date. Make sure the new policy keeps your original date so past work stays covered.
• Get written confirmation. Ask the new insurer to confirm that they’ll honour your retroactive date before you switch.
• Avoid any cover gap. Even a short break may reset your retroactive date or remove past cover.
• Report known issues early. Tell your insurer about likely claims before the policy ends.
• Keep old policy records. Save past policy documents in case cover continuity is questioned.

If you’re unsure about any aspect of switching or cancelling your professional indemnity insurance, speak to your insurer or broker.

What is claims occurring insurance?

The other type of payment basis, claims occurring can pay out for claims involving incidents that occur during the insurance period, even if the claim is made later (after the policy ends).

An example of claims occurring

A client claims against a business for property damage on a previous project completed in October 2024:

• If they had a ‘claims occurring’ public liability policy active during October 2024 (when the incident occurred), they could be covered
• If their policy didn’t start until November 2024, they won’t be covered

Is it better to have claims made or claims occurring insurance?

There’s no “one-size-fits-all” answer for which is better. It totally depends on your work and which insurance you need.

Claims made is typically offered with professional indemnity (PI) insurance, whereas claims occurring is normally associated with public liability (PL). So, the first question you should be asking is which policy you need. Then you can consider on what basis they cover you and if you need extra protection.

For example, PI insurance covers you for past work providing the policy is currently active. So if you cease trading or merge businesses, something like a run-off cover extension could continue to cover you for past work.

Why is it important to understand the difference?

Understanding the claims basis of your policy is critical – it’s not just paperwork, it’s protection.

It’s one thing to buy insurance, but when it comes to making a claim, you need to know what you’re covered for and how your insurance can react to an incident.

If you purchase an insurance package that includes multiple cover types (e.g. professional indemnity + public liability + employers’ liability), you should always check your policy documents to understand how your business is covered.

Claims made vs claims occurring example

An insurance package could include:

• A public liability policy that covers claims on a claims occurring basis
• A professional indemnity policy that covers claims on a claims made basis
• An employers’ liability policy that covers claims on a claims occurring basis

As always, if you’re unsure what your insurance covers, contact your insurer for clarification.

Short summary of claims basis types

Claims made vs claims occurring isn’t just industry jargon, it directly affects whether you’re protected when something goes wrong.

• Claims made = protection depends on when the claim is reported
• Claims occurring = protection depends on when the work was done

If you’re unsure which applies to your policy, it’s always worth checking with your insurer – the difference could be significant when you need to claim.

Insurance support with Kingsbridge

Hopefully you can walk away with a better understanding of how your insurance policy works, but if you still have questions, we’re here to help.

With Kingsbridge insurance, we provide access to dedicated in-house experts who can take the time to talk you through your policy and assist with any queries you have.

Need help understanding your policy? Get in touch today on 01242 801 603 or email our support team.

Frequently asked questions

Is professional indemnity insurance claims made or claims occurring?

In the UK, professional indemnity insurance is almost always written on a claims made basis. If the policy has lapsed by the time a client makes a claim, there may be no cover, even if you were fully insured when the work was done. Always check your policy documents for the exact terms.

Is public liability insurance claims made or claims occurring?

Public liability insurance in the UK is typically written on a claims occurring basis. This means it could cover incidents that occur during the policy period, regardless of when the claim is eventually made. For a full explanation of how public liability cover works, visit our public liability insurance page.

What is run-off cover?

Run-off cover is a type of insurance for businesses that have stopped trading. It’s designed to cover claims that might be made in the future regarding work completed in the past. Since claims made policies only work while they are active, run-off cover may help to maintain your protection after you retire or close your company.

Run-off cover may be worth considering if you’re:

• retiring from your profession

• closing a limited company or winding down as a sole trader

• changing career or leaving a role that required professional indemnity insurance

• selling your business where the buyer won’t take on your historic liabilities

How long might I need run-off cover?

Six years is the usual benchmark for run-off cover, reflecting the main limitation period for contractual claims under the Limitation Act 1980. Longer cover may be sensible in some cases, like for professions with longer-tail risks like architecture, engineering, or construction consultancy. Or, where work was done under a deed, it can carry a 12-year limitation period.

Some professional bodies, including ACCA and RICS, typically expect at least six years of run-off cover, and for some firms the Law Society makes it a regulatory requirement. It’s always worth checking the specific rules that apply to your profession or membership body.

What happens if you cancel a claims made policy?

Cancelling a claims made professional indemnity policy doesn’t remove your liability for past work. It cuts off the insurance that could respond to it. So, if a former client brings a claim after the policy ends, there may be no insurer to defend the case or pay compensation, leaving you to cover the costs yourself.

What happens if a claim is made after my PI policy ends?

If a claim is made after your PI policy has ended and you have no run-off cover in place, there may be no insurance to respond. This is why it may be worth either keeping your policy continuously active or arranging run-off cover when you stop trading.

Which is cheaper: claims made or claims occurring insurance?

Claims made policies typically have lower initial premiums because in the early years the insurer is only covering a limited period of past work. Premiums tend to rise over the first few years as the retroactive cover period grows. Over a full career, the total cost may be broadly similar once run-off cover is factored in.

Does public liability cover past work after cancellation?

Public liability insurance is typically written on a claims occurring basis, so it may cover incidents that happened while the policy was active, regardless of when the claim is filed. This generally means run-off cover isn’t required for public liability in the way it is for professional indemnity. That said, it’s always recommended to check your specific policy terms.

What happens if I have a gap between two PI policies?

A gap between two claims made policies may result in the new insurer resetting your retroactive date to the start of the new policy. This could remove cover for all work completed before the gap. It’s often beneficial to ensure your new policy starts on the day your previous one ends, and to confirm in writing that your retroactive date has been carried forward.

Is cyber insurance written on a claims made or occurrence basis?

Cyber insurance is often written on a claims made basis, similar to professional indemnity. A data breach or system attack may not be discovered until weeks or months after it occurs. Because the harm tends to be financial rather than physical, insurers may use the claims made model to manage the timing risk. If you hold cyber insurance, you should check the basis of cover with your insurer.

How can I tell which basis my policy uses?

Your policy document or schedule should outline which basis your policy uses. A claims made policy will typically refer to claims first made during the period of insurance. A claims occurring policy is more likely to refer to injury or damage occurring during the period of insurance. If the wording is unclear, always ask your broker for confirmation of the basis of cover.

Does product liability insurance use a claims occurring basis?

Product liability insurance is typically written on a claims occurring basis, similar to public liability. The policy active when the product caused injury or damage is generally the one that may respond, regardless of when the claim is made. If you’re a tradesperson or manufacturer, this may mean that past products remain covered by the policies that were in force at the time, even if you’ve since changed insurer or cancelled your cover.

What happens if I change my career or industry?

Changing career or moving out of a professional role doesn’t remove your liability for past work. Because professional indemnity is claims made, a former client could still make a claim relating to work you completed years earlier. If you stop providing professional services, you may wish to consider run-off cover to maintain protection for that period. This is particularly relevant if you worked as a contractor or consultant and are moving into a different type of role.