When shopping for insurance, you’ll come across two key policy types: claims-made and occurrence.
These terms describe how and when coverage is triggered—and the difference matters more than most people realize.
For professional liability insurance, including legal malpractice coverage, nearly all policies today are claims-made. In fact, it’s exceedingly rare to find an occurrence-based legal malpractice policy in today’s market.
Still, understanding how these policy types work is essential, especially when your firm carries multiple types of coverage. Many other common business policies, such as general liability, auto, or property insurance, follow an occurrence format.
Knowing the difference can help you manage risk more effectively and avoid costly surprises.
In this post, we’ll break down what each policy type means, walk through real-world examples relevant to legal professionals, and explain why professional liability is structured the way it is.
What Is a Claims-Made Policy?
A claims-made policy provides coverage only if the claim is made while the policy is active—regardless of when the alleged error or omission occurred. In other words, the policy that matters is the one in force when the claim is filed, not when the work was done.
For law firms, this type of policy is the standard format for professional liability insurance, including legal malpractice.
To qualify for coverage under a claims-made policy, two conditions generally must be met:
- The policy must be in force when the claim is made, and
- The incident that led to the claim must have occurred on or after the policy’s retroactive date (also known as the prior acts date).
If either of those conditions isn’t met—say, the claim comes in after the policy expires, or the work happened before the retroactive date—coverage is likely to be denied.
This is where tail coverage, also called an extended reporting period, becomes important. Tail coverage allows attorneys to report claims after a policy ends, as long as the incident occurred during the active coverage period. This is especially useful when retiring, closing down your firm, or during mergers/acquisitions, helping ensure your past work is still protected.
For example: Say your firm advised a client in a corporate merger in 2022. In 2025, the client alleges that your legal counsel contributed to a financial loss and sues you for legal malpractice. If you carry a claims-made policy that’s still active in 2025—and the retroactive date goes back to at least 2022—your policy will respond. But if your coverage lapsed in 2024 and you didn’t purchase tail coverage, that claim likely won’t be covered.
What Is an Occurrence Policy?
An occurrence policy provides coverage based on when the incident took place, not when the claim is filed. As long as the event that led to the claim happened during the policy period, the policy will respond, even if the claim is filed years later.
This policy format is common for other types of business and personal insurance, such as general liability, auto, or homeowners insurance. These policies are designed to cover events that may not generate claims until much later, like a slip-and-fall injury or property damage.
Because coverage is triggered by the date of the incident (not the date of the claim), tail coverage isn’t necessary. The policy remains responsible for incidents that occurred during its term, even if the policy has long since expired.
For example: Say you drafted a will for a client in 2021 while covered under an occurrence policy (hypothetically). In 2024, the client’s family alleges negligence and files a malpractice claim. Because the work was performed during the 2021 policy period, that policy would respond, even though it expired years ago. (In practice, however, your legal malpractice policy would be claims-made.)
Claims Made vs. Occurrence Policies: Overview
While law firms rarely have a choice between these two formats for legal malpractice coverage, it’s still important to understand how they work, especially when managing multiple insurance policies across your practice.
Here are the key differences:
Trigger for Coverage
- Claims-Made: The policy must be active when the claim is made.
- Occurrence: The policy must have been active when the incident occurred.
Tail Coverage
- Claims-Made: Tail coverage is often necessary when retiring, closing down your firm, or during mergers/acquisitions.
- Occurrence: No tail coverage is needed—coverage is permanent for incidents during the policy term.
Retroactive Dates
- Claims-Made: Coverage only applies to incidents that happen on or after the retroactive (prior acts) date.
- Occurrence: Retroactive dates don’t apply.
Premium Structure
- Claims-Made: Typically lower initial premiums that increase over time (often “step-rated” in early years).
- Occurrence: Generally higher premiums from the start, but more predictable long-term.
Why Professional Liability Is Claims-Made and What That Means for Your Firm
If your law firm carries professional liability insurance, it’s almost certainly a claims-made policy.
These policies are designed to address the long-tail nature of legal claims, where issues may arise years after the work was done.
But even if you’re not choosing between claims-made and occurrence coverage for malpractice, understanding the difference can help you:
- Avoid gaps when switching carriers or retiring
- Properly budget for tail coverage
- Understand which policy to file a claim under
That’s why it’s important to work with an insurance advisor who understands the nuances of legal risk and how each coverage type fits into your overall protection strategy.
Protect Your Firm with the Right Policy—Today and Tomorrow
Choosing between a claims-made and an occurrence policy isn’t just about insurance jargon—it’s about making sure your firm is protected when it matters most. Whether you’re managing a busy caseload, planning for retirement, or expanding your practice, the right insurance coverage can safeguard your reputation, your finances, and your future.
Every law firm has different exposures, goals, and budget considerations. That’s why a one-size-fits-all approach doesn’t work when it comes to professional liability insurance.
At Kouwenhoven & Associates, we help law firms make informed, strategic insurance decisions—backed by decades of experience and a deep understanding of legal risk.
Let’s talk about what’s right for your firm.
Contact us today to review your coverage options or get a personalized quote.
