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Occurrence-based vs. Claims-made Policy: What’s the Difference to Your Nonprofit?

Nonprofits Insurance Alliance (NIA)

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Commercial General Liability (CGL) insurance coverage falls into two policy categories: occurrence-based and claims-made.

What do these terms mean to your nonprofit?

Which is best for your nonprofit?

For nonprofits, occurrence-based policies are almost always a better option, because they give you more protection and fixed-costs. That’s why NIA provides CGL coverage as an occurrence-based policy.

Here’s a simple breakdown of how it works:

Occurrence-based Policy

An occurrence-based policy is designed to cover losses that happen during the time an organization has that policy, regardless of when the claim is filed.

With an occurrence-based policy, your nonprofit will be protected for the time period the policy covers, even if:

  • A claim is filed many years after an injury or damages become known
  • Your organization switches to another insurance policy or carrier
  • Your organization cancelled its insurance policy and has not yet replaced it with new coverage

For nonprofits with limited resources, occurrence-based policies offer:

  • Fixed-costs
  • Long-term protection beyond the life of the policy
  • The ability to switch carriers without purchasing an extended reporting period provision, or tail coverage, which can be expensive.

Occurrence-based Example:

  • A nonprofit had occurrence-based CGL policies for the time period July 1, 2015 – June 30, 2018.
  • A former client of the nonprofit files a claim in 2021 for injuries sustained while working with the organization in 2016.
  • Even though the nonprofit cancelled its policy in 2018, it is protected from this claim because the incident occurred when the policy was in effect.

Claims-made Policy

A claims-made policy is designed to cover losses that are filed only during the policy period. Claims that are filed after the policy ends are typically not covered or protected by insurance unless an extended reporting period provision, or tail coverage, is purchased for an additional premium.

Claims-made Example:

  • A nonprofit had claims-based CGL policies for the time period July 1, 2015 – June 30, 2018 and did not purchase additional and costly tail coverage.
  • A former client of the nonprofit files a claim in 2021 for injuries sustained while working with the organization in 2016.
  • The nonprofit is not protected from this claim because it cancelled its policy in 2018.

Get Commercial General Liability Insurance for Your Nonprofit

Learn more about NIA’s occurrence-based Commercial General Liability insurance coverage for nonprofits.

Learn More