What is an Occurrence based wording?

There are many different types of Insurance products available for consumers in today’s market together with many different policy wordings. A claim under a home and contents policy is triggered by either an accident or a Fire & Peril (such as flood, fire etc). A Public Liability Policy is not triggered in the same way and is triggered by an occurrence/event.

Liability policies have two different wording types. One is called ‘Occurrence based wording’ which serves the majority and then you can have ‘Claims made wordings’ which are generally for specific industries or specialist schemes. For this example, we are talking about 'Occurrence based' wording only.

What is an Occurrence

Every Insurer will have their own definition stated in the policy wording, but basically, an Occurrence is an event that results in Personal Injury or Property Damage that is neither expected nor intended.

The majority of Liability policies are Occurrence based wording and I will explain what that means.

The Insurer that was on risk at the time of the occurrence/ event responds to alleged acts of negligence regardless of when it was lodged (subject to the statute of limitations). This means you are protected from an incident that occurred while the policy was in force.

If there was an occurrence/event 2 years ago that resulted in a third party suffering injury, they may only bring the claim against you today, so the insurer who covered you at the time of the occurrence (2 years ago) responds to the claim and not the insurer you have today.

Example of occurrence based scenario:

In 2013 an occurrence resulted in a third party suffering injury and you were insured with XYZ Insurance. In 2017 the claim was notified to you and you were then covered with a new insurer ABC Insurance. In this scenario, XYZ Insurance will handle the claim because that is who you were insured with at the time of the occurrence.

It is extremely important to consider continuity of cover at all times and even run-off cover after a business has ceased because there are always components to a wind-down / ceasing of a business that still present exposures. Your products may still be in circulation, or you are still carrying out ‘business’ activities in relation to the wind-down/cease of the business.

PLEASE NOTE THIS DOES NOT REPRESENT 'FINANCIAL ADVICE' AS EACH PERSON'S INDIVIDUAL REQUIREMENTS WILL BE UNIQUE TO THEIR SPECIFIC NEEDS.