Insurance protection for your business is essential but are you getting the right type of protection that suits your particular business needs? Before you sign on the dotted line for Alabama business liability insurance, you need to be aware of some significant distinctions between “claims-made” insurance and “occurrence.” Knowing some of the differences between the two insurance policies can ascertain that your business is being protected as you see fit based on your particular needs and budget.
Below Are Some of the Biggest Distinctions Between Claims-Made and Occurrence, but Not Limited to:
Policy Limits of Liability
With claims-made insurance, your selected limit of liability insurance coverage lasts for the entirety of the policy period, but once exhausted is gone. For example if you have a $1 million limit of liability and you experience a catastrophic injury claim that uses it all, you have nothing remaining for liability coverage protection unless you increase your limits at some point.
On the other hand, with an occurrence based insurance policy, your limits of liability are reset every year at renewal and you will have an aggregate limit along with a per occurrence limit to use regarding liability claim payouts. An aggregate amount is the total amount eligible to pay out for all claims whereas the per occurrence amount is the maximum amount payable per incident, but not to exceed the aggregate amount.
Coverage Trigger
With a claims-made policy, your coverage is triggered when a claim is made against an insured during the policy period. The bodily injury sustained may or may not happen during the policy period but the claim must be made while that insurance policy is in effect. Basically you must have active insurance or you can’t file a claim with this type of policy.
However, with occurrence insurance, coverage for bodily injury applies as long as you had insurance when the loss occurred. This policy provides a more expansive type of coverage in that it takes “long tail” situations into consideration. Long tail means that sometimes injuries don’t present themselves until a later date. For example, if a customer slips and falls in your business, he/she may claim to have no injuries but later you are faced with an injury claim citing injury as a result of that fall. Most businesses operate under an occurrence-based insurance policy due to the broader coverage; however it is more costly.
Your Alabama Business Insurance Needs Are Our Priority
We can assist you with any questions you may have regarding how occurrence or claims-made insurance would best suit your budget and business. If you are a new business owner with limited funds, it may be more suitable to go with the claims-based insurance policy, especially if you don’t plan to cancel your policy. However, if your Alabama business is established, you may prefer the broader coverage benefit of the occurrence insurance.
Either way, Burkett & Associates Insurance Agency works as an independent insurance agency that wants to work for you and with you. We can shop your coverage options with the leading Alabama business insurers to find the best coverage suitable for all of your business needs within a budget affordable to you. Call us TODAY at 256-704-7400.
