Basis of Liability Cover – What’s Best For You?
When purchasing a liability insurance policy there are two different types of basis to choose from; ‘Occurrence’ and ‘Claims-Made’. While as a consumer you may have never heard of either of these insurance terms, they can have a huge impact when someone claims from you. It’s possible you might not even have the cover you thought you had.
‘Occurrence’ basis covers losses that happen (occur) during the time that the policy itself is actually in force. The issue with Liability claims is they can be reported months or years later after the policy has expired. If the loss occurred while the policy is in force, when it is actually reported in the future is irrelevant. The Occurrence basis, is generally considered to be the more valuable because it responds to claims brought about years later.
‘Claims-made’ policies can be considered as more restrictive in that it only covers claims that are made while the policy is in force.
For example, if a ‘claims-made’ policy expired on 1st June 2012 and a claim is submitted on the day after, 2nd June 2012 connected to a treatment given on the 30th May 2012, there is no coverage because it was made outside of the policy’s effective term.
As the name indicates, ‘claims-made’ policies provide coverage only for those claims made during the time the policy is in force. These policies provide coverage only so long as you continue to pay premiums for the initial policy and any subsequent renewals. Once premiums stop, the coverage also stops for any claims not known or made to the insurance company during the coverage period. Beware! There is a risk of an unknown or unreported claim being made long after the policy period expires and it not being covered because the claim was made outside of the coverage period.
A claims-made has no guarantee of continued insurability, so if your policy is, for some reason, cancelled by an insurance company, you may not have coverage in the future for work or activities performed in the past.
Losses Occuring policies give you greater protection.
Claims-made policies are likely to be preferred by insurers because their exposure is automatically limited to losses if they cancel or don’t renew.
Individuals, such as beauticians, hairdressers or nail technicians who may allow their insurance cover to lapse because they are pursuing other interests or maybe temporarily cease work to study or raise a child must consider the restriction of cover provided by a claims made policy once the policy has lapsed or been cancelled.
Professional Beauty Direct Insurance Policies for individual Beauticians, Hairdressers and Nail Technicians are provided on a Losses Occurring Basis giving you that important peace of mind with annual premiums from £37.50.
Professional Salons Direct Insurance Policies for Beauty, Hairdressing Salons and Nail Bars are provided on a Losses Occurring Basis giving you contents cover along with £5M of Public/Products and Treatment. Annual premiums are from £140.
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