THE KANSAS CHAPTER OF PRIMA

The State of Kansas

CLAIMS MADE VS OCCURANCE

 

Claims-Made

Occurrence

Limits of Coverage

If no other coverage (such as Prior Acts and Extended Reporting) is purchased, incidents must occur and be reported while the policy is in force. Incidents must occur while the policy is in force, but they may be reported at any future time.

Prior Acts or Retroactive Coverage

This additional coverage must be purchased to cover claims arising from incidents that occurred before the policy's actual effective date. No Prior Acts Coverage is available because the policy will only cover incidents occurring while the policy is in effect, even if a claim is reported much later.

Extended Reporting or Tail Coverage

Tail coverage must be purchased whenever a policy with an insurance company ends. This will ensure that future claims arising from the period the policy was in effect will continue to be covered. No tail needs to be purchased. Claims that arise from incidents that occurred during the policy period are covered, no matter how far into the future they are reported.

Cost

The cost may be relatively low at first because the policy only covers the entity from prior acts renewals until the potential for claims reaches a plateau.* Cost may be prohibitively high from the beginning because the entity is paying in advance for any incidents during the policy period that MAY some day turn into claims.
*A time which is established from the insurance company's overall experience. This may take from four to seven years. To change from claims-made to occurrence coverage may require purchase of an extended reporting endorsement from the claims-made carrier. This can be cost-prohibitive.