Claims Made v Claims Occurring: Why your policy wording matters

Insurance Dictionary

Abuse claims could be made against any care provider, at any time. We look at why your insurance policy wording matters when it comes to reporting claims – and when placing your insurance cover.

Since the turn of the decade, claims of historical abuse have taken centre stage in the public consciousness.  Documentaries including ITV’s ‘Exposure’ programme on Jimmy Savile – and the recent scandal in football – have uncovered the scale of the issue, helping survivors of abuse to gain the confidence they need to finally come forward.

At the other end of the scale, BBC’s ‘Panorama’ has run a series of undercover exposés in recent years into practices in elderly care homes, the most recent of which was aired in November 2016.

This shows us that abuse has happened in the past and, sadly, it still happens now.  It happens to young people, old people, and those with mental health difficulties.  All these people are vulnerable – and it may be the responsibility of your care home to tend to them.

While you would expect that your insurance policy might cover your organisation for any allegations of abuse and molestation during your current period of insurance, what would happen if an allegation of historical abuse was raised?

Does your insurance policy cover you?

This is the first question that you would need to answer if a claim of historical abuse comes your way.  Would you be covered by your current insurance policy, would you be covered by a previous policy – or would you be covered at all?

The answer is not always straightforward, and can depend upon when the alleged incident happened and when it was reported.  This is where understanding the difference between a ‘claims made’ wording and a ‘claims occurring’ wording is important – as is understanding what a ‘retroactive date’ is.

If you are insured on a ‘claims made’ basis, then you will be covered for any claims made and reported during the policy period only.

Most policies are renewed on an annual basis, so if (for example) you took out cover with Old Insurance on 1st January 2016 and a claim was made or reported for an incident occurring anytime between that date and 31st December 2016, then you would be covered during that time by that policy.

However, if you move your policy to New Insurance from 1st January 2017 onwards and you need to make a claim for an incident that happened in October 2016, your insurance policy with Old Insurance would not cover you because that policy has now lapsed.  New Insurance equally would not cover this, as the incident has not happened during your policy term with them.

There are two exceptions to this.

  1. If you notify Old Insurance that there might be a potential claim due to the incident in October 2016, then they are aware of the incident and could potentially go on to pay out on the claim, even if it is lodged after the policy has lapsed.
  2. The other exception occurs if you have a ‘retroactive date’ on your policy. This date is the earliest date that you can make a claim on your policy, and while often this is the policy start date, it can sometimes be arranged to be prior to the date of the current policy inception to cover the claims made period.

A ‘claims occurring’ policy wording, on the other hand, meets claims that occur during the policy period, regardless of when the claim is made.  Taking the above example once more, if you took out a policy on a ‘claims occurring’ wording on 1st January 2016 and moved to a new insurer on 1st January 2017, if a subsequent claim was made for alleged abuse dating from 2016, you could still potentially make a claim on the old policy.

Not all insurers will offer a ‘claims occurring’ policy wording.  This is important when it comes to abuse claims – as illustrated above, while you might be covered now for an abuse claim, it may take years before some claims are made.  During that time, members of staff may have moved on, or you might not even have been involved with the management of the home in the past, yet the claim will still be made against your home.

Nonetheless, a 'claims made' wording may be adequate to protect you, particularly if you can purchase retroactive cover separately.  This is where the value of a good insurance broker comes in; we can provide advice on the type of cover necessary to protect your individual circumstances.


Talk to us

If you are unsure about your current arrangements or simply wish to discuss your options, please contact our friendly care and charity insurance team.  Because we have years of experience in your sector, we can call upon a range of insurers to negotiate the best terms for your care home and ensure that you have the best cover we can possibly provide for any issues that may occur, now or in the future.

It is really important that you are covered on the right basis to meet your needs, and that your insurance broker fully understands the different policy wordings that can be provided to you.  Speak to Bollington for no-obligation advice regarding your current – or future – arrangements.  Call us on 01625 348 029 to speak to a DBS-checked team member today.