As a business owner, you realize you need the right business insurance protection but knowing the different types of insurance may seem confusing. Before you invest in any type of business insurance protection, it is essential you know the difference between occurrence versus claims-made insurance so you get the type of insurance that best suits your business needs at an affordable rate to you.
What Are Your Business Needs?
Each business is different so the type of insurance that best suits your needs may be different from the next business owner. Some of the biggest distinctions between claims-made insurance versus occurrence-based include, but not limited to:
With a claims-made policy, your coverage is triggered when a claim is made/filed against you during the policy period. Basically you must have active insurance or you can’t file a claim with this type of policy.
In contrast, with an occurrence-based insurance policy, coverage for bodily injury and property damage claims applies as long as you were insured when the loss occurred. Most businesses prefer occurrence-based insurance as it takes into consideration losses that may not present themselves immediately. For example, a slip and fall victim may seem uninjured initially but a year later you may be hit with a lawsuit and a bodily injury claim.
Regarding your business policy limits of liability, a claims-made policy provides insurance protection for an amount chosen, but this selected amount of liability coverage must last for the entirety of your policy, unless at some point you choose to increase your limits in the next year. For example if you elect $1 million dollars of liability coverage and you experience a catastrophic loss, that $ 1 million dollars of coverage must last you for the duration of your policy.
However, with an occurrence-focused policy, your limits of liability are reset every year at renewal. For example if you have an aggregate $1 million dollar liability limit, this is the most your insurer will pay out towards all claims but there is also a “per occurrence” amount of money which represents the most your insurer will pay per occurrence or per loss.
Occurrence Versus Claims-Made; Which Insurance Fits Your N.C. Business Needs?
As a new business owner, you may lean towards the lower cost of the claims-made policy particularly if you don’t plan to cancel your insurance policy. But if you are an established business owner, you may prefer the benefit of having broader coverage protection offered by the occurrence-based insurance. The larger your business means you are exposed to larger risk exposures and having more expansive coverage may be appealing, despite a higher cost.
Twin City Insurance Agency understands the importance of having the right type of insurance suitable for your specific N.C. business needs at an affordable rate. Call us TODAY at 828-464-2643.