Difference Between Claim Based And Occurrence Based Commercial Insurance Policy

By Author: Andrew Edwards
Total Articles: 125
Comment this article

When you plan to get a commercial insurance policy for your business then most of the times you have apply for claim based 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 policy. 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 based policy.

If you look further for the facilities which are provided by a claim based and occurrence based policies then you will realize that claim based 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 policy.

If a defective product is distributed in market and ...
... then customers report the claims for the bodily injury or property damages then a claim based policy and occurrence based policy follows different procedures. A claim based 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 insurance policy 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 policy because when you take a product liability insurance policy 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 policy 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 policy becomes more costly then an occurrence based policy.

Claim based policy only offer coverage till the policy 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 policy 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.

About: - If your business is covered by business interruption insurance then there are less chances of financial crisis faced by you. This policy protects you from various liabilities.