What is the difference between occurrence and claims-made policies?

Understanding the difference between occurrence and claims-made policy forms is essential because it determines when you have coverage and how long that coverage extends after your policy ends.

An occurrence-based policy covers any incident that occurs during the policy period, regardless of when the claim is actually reported. If your policy was effective from January 1 to December 31, 2026, and a tree you pruned in March 2026 drops a limb in July 2027 causing property damage, your 2026 occurrence policy responds even though the claim is filed after the policy expired. This "tail" of coverage is a major advantage and is the primary reason occurrence policies are preferred by most tree service companies and their clients.

A claims-made policy only covers claims that are both made (reported) during the policy period and that arise from incidents occurring after the policy's retroactive date. If you switch carriers or let your policy lapse, you lose coverage for incidents that have not yet resulted in claims — even if those incidents occurred while the policy was active. To close this gap, you must purchase an Extended Reporting Period (ERP) endorsement, commonly called "tail coverage," which can be expensive — often 100 to 200 percent of the annual premium for a multi-year tail.

For tree service companies, occurrence policies are strongly preferred because the nature of tree work creates long-tail exposure. A tree that was pruned or treated years ago might fail and cause damage well after the job was completed. Property damage from root systems can take years to manifest. An occurrence policy provides ongoing protection for all completed work without requiring additional purchases when the policy ends.

Claims-made policies are more common in professional liability (errors and omissions) and pollution liability lines, where they are sometimes the only form available. If you carry a claims-made policy for any coverage line, it is critical to maintain continuous coverage with the same carrier or purchase tail coverage when switching. Any gap in coverage on a claims-made policy can leave you with no protection for prior work.

When reviewing proposals from your broker, always verify whether each policy is occurrence or claims-made. If a carrier offers a claims-made general liability policy, ask why — it may indicate they are trying to limit their exposure on your account, which could be a red flag about how they view your risk.