There are two types of professional liability coverage available to PAs — “occurrence” and “claims-made.”
Occurrence Policies –
Occurrence policies cover incidents that happen during the policy period without regard to when the claims are reported. Occurrence coverage provides protection for each policy period indefinitely.
For example, if you had an occurrence policy in 2003 (which you terminated in 2005), and then are sued in 2017 for an incident in 2003, you will be protected.
Occurrence policy basics:
- This policy provides coverage for incidents that happened during the policy period, no matter when the claim is filed.
- You will not need an extended reporting endorsement (“tail” coverage) if you take an extended leave from your career.
- Premiums in the first few years are more expensive than claims-made policy premiums (until the claims-made policy reaches maturity); over time, the total costs should even out if you consistently maintain your own policy.
- Occurrence policies are relatively rare since insurers have difficulty estimating the cost of claims long after a policy expires.
Claims-made insurance covers incidents that happen only while the policy is in force; once the policy has been terminated, coverage no longer exists. If you want coverage after the policy has been terminated, then tail coverage must be purchased.
For example, if you had a claims-made policy in 2006 (which you terminated in 2008), and then are sued in 2017 for an incident in 2006, you would not be protected.
Claims-made policy basics
- This policy provides coverage for incidents and claims that are filed during the policy period only.
- You must keep up with your policy/policies to ensure that you do not have gaps in coverage.
- This policy is generally inexpensive at first, then gradually increases (“steps up”) over time—about five years—to a “mature” premium.
- If an incident happened during the policy period, but the claim was filed after the policy expired, then the insurance will not cover that claim.