MENUMENU
  • About Us
  • Business Insurance
        • General Liability Insurance
        • Workers' Compensation Insurance
        • Commercial Property Insurance
        • Errors & Omissions Insurance
        • Cyber Liability Insurance
        • Hired and Non-Owned Auto Liability For Small Business
        • Directors & Officers Insurance For Small Business
        • Key Person Insurance For Small Businesses
        • License Bonds For Small Businesses
        • Fidelity And Surety Bonds For Small Businesses
        • Employment Practices Liability Insurance For Small Businesses
        • Excess Liability (Umbrella) Insurance For Small Business
        • Professional Liability Insurance For Small Business
        • Media Liability Insurance For Small Businesses
        • Commercial Auto Insurance
        • VIEW ALL
  • Employee Benefits
        • Group Health Insurance
        • Group Dental Insurance
        • Group Vision Insurance
        • Group Life Insurance
        • Group Short-Term Disability
        • Group Long-Term Disability
        • VIEW ALL
  • Who We Insure
  • Resources
  • Blog
Get A Quote
Log In
Get A Quote
Log In
888-242-4675
MENUMENU
  • About Us
  • Business Insurance
        • General Liability Insurance
        • Workers' Compensation Insurance
        • Commercial Property Insurance
        • Errors & Omissions Insurance
        • Cyber Liability Insurance
        • Hired and Non-Owned Auto Liability For Small Business
        • Directors & Officers Insurance For Small Business
        • Key Person Insurance For Small Businesses
        • License Bonds For Small Businesses
        • Fidelity And Surety Bonds For Small Businesses
        • Employment Practices Liability Insurance For Small Businesses
        • Excess Liability (Umbrella) Insurance For Small Business
        • Professional Liability Insurance For Small Business
        • Media Liability Insurance For Small Businesses
        • Commercial Auto Insurance
        • VIEW ALL
  • Employee Benefits
        • Group Health Insurance
        • Group Dental Insurance
        • Group Vision Insurance
        • Group Life Insurance
        • Group Short-Term Disability
        • Group Long-Term Disability
        • VIEW ALL
  • Who We Insure
  • Resources
  • Blog
  • InsureYourCompany.com
  • Blog
  • Business Insurance
  • Asbestos Cases Illustrate Claims-Made Vs. Occurrence Insurance Policies

Asbestos Cases Illustrate Claims-Made Vs. Occurrence Insurance Policies

Dan Levenson April 07, 2016

Business Insurance Insurance claims Insurance Policy Liability Insurance Workers Compensation

Business owners are far more insurance savvy than the typical policyholder. Still, unless they’ve spent a lot of time reading commercial insurance contracts, they might never have thought about claims-made vs. occurrence insurance policies. While these terms might come across like typical insurance jargon, they are important options for purchasers of commercial liability insurance policies. To explain it simply:

  • Claims-made policies provide coverage for claims made while a liability policy is in force. These policies may have a reporting period that extends the reporting deadline beyond the policy expiration date.
  • Occurrence policies provide coverage only for incidents that take place while the policy is in force.

The Asbestos “Occurrence” Problem

Commercials about mesothelioma lawyers and asbestos settlement trusts are the remnants of a decades-old body of cases that may never fade away. These cases are also a perfect illustration of the differences between occurrence vs claims-made policies. When doctors across the country began diagnosing asbestos-related illnesses in the 1970s, diseases were showing up in workers exposed to asbestos fibers as early as the 1940s. Due to the delayed manifestation of asbestos-related diseases, medical confirmation often came decades after exposure.

When asbestos manufacturers began shipping lawsuits to multiple insurance companies, it became an “occurrence” nightmare. Insurers accepted the suits but reserved their rights to decline coverage. At that time, many liability policies were “occurrence” based. Insurance companies had to decide if they owed their policyholders coverage or a defense.

Some insurance companies believed that when a worker was first exposed to asbestos it was potentially covered as an “occurrence.” Under this theory, the insurers providing coverage in previous decades would owe defense and indemnity. Other insurance companies decided that the disease’s manifestation date was the “occurrence.” Based on this theory, the insurer that provided coverage when the worker first became ill had a duty to defend and pay damages. The manifestation/exposure/occurrence battle went on for years.

Claims-Made Policies Reduce Occurrence Problems

Insurance companies and their policyholders spent a lot of time and legal expenses battling asbestos exposure vs manifestation issues and which insurance companies were responsible for paying claims. If claims-made coverage had been available to all of the asbestos defendants, the coverage issues would have been far less complicated. Barring other coverage obstacles, the insurance company with a claims-made policy in force when a plaintiff first makes a claim would defend the suit and pay damages for which an insured was found liable.

Notice is Important

Of course, insurance coverage isn’t quite that simple. Whether a liability policy is occurrence or claims-made, insurance companies require “…notice as soon as practicable…” Asbestos manufacturers were allegedly on notice of problems long before sick plaintiffs began filing suits. This delayed notice added another layer of coverage issues that would have been a problem no matter which type of policy was in force.

Timely notice is crucial for both types of policies. It allows an insurance company to investigate a claim or get involved in the litigation process early on. Whether a company has a claims-made or occurrence policy when an insured reports a claim, the claims representative will want to know:

  • The date the person sustained injury
  • The date the insured first knew about the claim or potential for a claim

The answers can help the insurance company determine if notice was timely. Failure to notify the insurance company in a timely manner can jeopardize the insurance company’s ability to resolve a claim before it spins out of control.

Which Policy is Best For Your Business?

Liability coverage is very personal to each business. While an occurrence-based liability policy might be a good fit for one company, another company might need claims-made coverage.

Get a free business insurance quote today!

Need business insurance?

Get a free business insurance quote today!

Subscribe To Our Blog

  • Stay up to date with the latest insurance news and business advice from InsureYourCompany.com!

Business Insurance

  • General Liability Insurance
  • Workers’ Compensation Insurance
  • Errors & Omissions Insurance
  • Excess Liability Insurance

Employee Benefits

  • Group Health Insurance
  • Group Dental Insurance
  • Group Vision Insurance
  • Group Life Insurance

Business Insurance

  • General Liability Insurance
  • Workers’ Compensation Insurance
  • Errors & Omissions Insurance
  • Excess Liability Insurance

Employee Benefits

  • Group Health Insurance
  • Group Dental Insurance
  • Group Vision Insurance
  • Group Life Insurance

Small Business Resources

  • Business Insurance Blog
  • Get a Free Insurance Quote
  • Schedule an Assessment
  • Insurance for Businesses 101

InsureYourCompany.com

225 Gordon’s Corner Road, Suite 1H
Manalapan, New Jersey 07726
888-242-4675
Privacy Policy | HIPAA Policy | Contact Us
Created by potrace 1.15, written by Peter Selinger 2001-2017

Copyright © 2023 - InsureYourCompany.com, powered by Technology Insurance Associates LLC

Custom website design and development powered by the New Possibilities Group.

888-242-4675
Get a free quote