Originally Posted by Blackcat31:
There are two primary types of insurance policy forms: occurrence and claims-made.
Occurrence forms cover losses that happen during a given period of time (the policy term). The loss can be reported years later, but the key is when it happened.
A claims-made policy covers claims made during a given period of time. The loss may have happened many years in the past, but is reported during the current policy term.
As you can imagine, it is difficult to move from one type of form to the other. Occurrence forms are somewhat more valuable as they respond to claims years later.
A claims-made form has value, but no guarantee of continued insurablity, so if you are for some reason cancelled by an insurance company, you may not have coverage in the future for activities in the past. Some important aspects of claims-made policies that you may need to know are: retrospective date, extended reporting periods, and tail coverage, to name a few.
The key concept here is that a claims-made policy generally costs less than an occurrence policy, but you run the risk of not being covered for a potential claim because you didn't discover it until after your policy expired. As with all other aspects of insurance, the decision is a gamble, and you pay a price to lower your risk.
I apologize for my delay in responding, Essentially this is correct. The reason why insurance companies offer "Claims-Made" Forms is basically because they do not want to pay claims years after your policy period.
Occurrence form in my opinion is the only way to go. When looking for insurance give the company you are checking out a call and simply ask them if their policy is Claims-Made or Occurrence. Claims-Made is better than no insurance at all but if you can find a company that offers Occurrence form you will be much better off.