Claims-Made vs Occurrence Insurance: What Senior Living Facilities Need to Know
Claims-made insurance covers claims reported during the policy period, regardless of when the incident occurred. Occurrence insurance covers incidents during the policy period, regardless of when the claim is filed. Most senior living liability insurance is written on a claims-made basis because it provides more predictable loss development and allows for more precise technology-driven pricing.
How Does Claims-Made Insurance Work?
Under a claims-made policy, coverage is triggered when a claim is reported to the insurer during the active policy period. The incident can have occurred at any time — last week or five years ago — as long as the claim is filed while the policy is in force and after the retroactive date.
This structure is standard in healthcare liability for two reasons: (1) there is often a significant delay between a care incident and when a lawsuit is filed, and (2) it allows underwriters to price risk more precisely because they know the claims exposure ends when the policy terminates.
How Does Occurrence Insurance Work?
Under an occurrence policy, coverage is triggered by incidents that happen during the policy period, regardless of when the claim is eventually reported. If a resident falls during your 2024 policy year but the lawsuit isn't filed until 2027, the 2024 occurrence policy responds.
Occurrence policies provide permanent coverage for the policy year with no tail exposure, but they are more expensive because the insurer's exposure extends indefinitely.
Why Is Claims-Made Standard in Senior Living?
- Cost predictability — Claims-made premiums typically start lower and mature over 3-5 years as the policy "seasons," giving new facilities time to build their claims history.
- Pricing precision — Underwriters can more accurately price technology credits because the claims window is defined.
- Market availability — Most senior living liability capacity is written on a claims-made basis. Occurrence options are limited and significantly more expensive.
What Is Tail Coverage?
When a claims-made policy ends — whether through cancellation, non-renewal, or switching carriers — you need an Extended Reporting Period (ERP), commonly called "tail coverage." This covers claims reported after the policy ends for incidents that occurred during the policy period.
Tail coverage typically costs 150-200% of the final year's premium. Some carriers offer free tail provisions in specific circumstances (retirement, death, disability).
How Does CareFront Handle Claims-Made Policies?
CareFront writes claims-made coverage with full prior acts coverage available for qualifying facilities. Our technology credits apply to claims-made pricing, and because claims-made allows for more granular risk assessment, facilities with strong technology stacks often see the largest premium benefit compared to occurrence alternatives.