Los Angeles Claims Adjuster Property and Causality Practice Exam

What is the main difference between an occurrence form and a claims-made form?

1. The timing of when claims can be reported

2. The amount of premium paid

3. The types of coverage limits provided

4. The duration of the policy coverage

The correct answer is: The timing of when claims can be reported

The main distinction between an occurrence form and a claims-made form lies in the timing of when claims can be reported in relation to when the incident occurred. An occurrence form provides coverage for incidents that happen during the policy period, regardless of when the claim is actually reported. This means that even if a claim is filed years after the event, as long as the event occurred while the policy was active, it will be covered. This type of policy continues to provide coverage for past incidents, offering long-term protection. Conversely, a claims-made form only covers claims that are made during the policy period. This means the timing of reporting is crucial; for coverage to apply, the claim must be filed while the policy is active. If the claim is reported after the policy has expired, even if the incident occurred during the covered period, it would not be covered unless there is a tail coverage extension purchased. Recognizing this key difference helps in understanding how coverage operates and the implications for policyholders regarding potential liability exposure and claims reporting. This distinction is foundational in risk management and insurance practice.