Occurrence Form vs. Claims-made Form

For most commercial insurance policies for restoration contractors there are two coverage forms that determine how your insurance policy will respond to a claim: occurrence form and claims-made form.

We want to spend the next two posts talking about these two forms and how it can affect your restoration company in the event of a claim.

Occurrence Form

Occurrence form is the most common type of coverage form for commercial insurance. In fact, aside from professional and executive liability policies, occurrence is the prevailing coverage on almost every other policy.

The term “occurrence” relates to the moment the claim/injury happens. Then, once the date of “occurrence” is established, the policyholder knows which policy (or policies) will respond to the incident. The policy in force at the time of the incident will be the one to defend the policyholder and possibly pay the damages resulting from the claim.

Unfortunately, as simple as the concept sounds, there are a number of different legal theories used to identity when the claim actually occurs. Every state is different and any one of the following precedents could be used to determine the occurrence date:

1. Injury-in-Fact: Some states consider that the date of ANY actual bodily injury or property damage is the date of occurrence regardless of the date of manifestation. (For example, the day the nail was driven into the electrical wire.)

2. Manifestation Theory: The majority of states consider the date the injury actually manifests itself or become evident as the occurrence. (i.e. the day the fire starts because of the nail that was driven into it. )

3. Exposure or Continuous Trigger Theory: Known by two different names, this is when the courts consider dates of exposure as the dates of occurrence. This usually means there will be multiple occurrence dates and multiple policies involved in the litigation and settlement of the claim. This theory is usually only used for pollution or other claims where there is a potential for a long exposure period.

For restoration contractors any one of the triggers could above could apply depending upon your policy and the type of claim. For example, general liability and business auto policies are pretty easy to determine which policy will respond. A pollution policy, especially one involving mold or asbestos or similar exposure risk will usually involve multiple policies and a cooperation from each insurance company.