CDPH Lead Inspector/Assessor California State Practice Exam

How does occurrence-based insurance differ from claims made insurance?

1. Covers claims made during the policy term

2. Covers losses during the policy term irrespective of claim filing times

3. Always less expensive than claims made policies

4. Requires immediate reporting of claims

The correct answer is: Covers losses during the policy term irrespective of claim filing times

Occurrence-based insurance is designed to cover incidents that happen during the policy period, regardless of when the claim is actually filed. This means that if a policyholder encounters a covered event—such as an accident or injury—that occurs while the policy is active, they are protected even if the claim is submitted after the policy has ended. This type of coverage focuses on the timing of the incident itself, rather than when the associated claim occurs, which is a critical element that differentiates it from claims-made insurance. Claims-made policies only provide coverage if both the incident and the claim occur during the policy term, which can create gaps in coverage for policyholders. The characteristic of covering losses during the policy term, irrespective of when the claim is filed, ensures that policyholders have ongoing protection against past incidents, providing peace of mind and financial security over the long term.