Running a business in Colorado means wearing many hats—serving clients, managing employees, and protecting your company from risks. One important part of risk management is choosing the right type of liability insurance policy. Two of the most common policy forms you’ll come across are claims-made and occurrence.
Understanding the difference between these two policy types is critical to making an informed decision. Here’s a straightforward breakdown designed for Colorado business owners.
What Is an Occurrence Policy?
An occurrence policy covers claims that arise from incidents that happen during the policy period—regardless of when the claim is reported.
Example (for illustration only):
- If an incident occurred in 2022 while your occurrence policy was active, but the claim isn’t filed until 2024, your policy from 2022 would still respond.
Key Features of Occurrence Policies:
- Coverage is tied to when the incident occurred.
- Long-term protection, even after the policy has expired (as long as the incident happened while it was active).
- Common in general liability policies for Colorado businesses such as contractors, restaurants, and retail shops.
What Is a Claims-Made Policy?
A claims-made policy provides coverage only if the claim is made (and reported) during the active policy period (or during an extended reporting period, if purchased).
Example (for illustration only):
- If your claims-made policy is in effect in 2025, a claim filed in 2025 would be covered only if both the policy is active and the incident happened after the policy’s retroactive date.
Key Features of Claims-Made Policies:
- Coverage is tied to when the claim is reported.
- Often used for professional liability (errors & omissions, directors & officers, employment practices liability).
- May require “tail coverage” or an extended reporting period if you cancel or switch carriers, to avoid gaps.
Why Does This Matter for Colorado Business Owners?
- Construction Companies & Contractors: Many contracts in Colorado specify the need for occurrence-based general liability policies because they protect against claims that might not surface until years later (like property damage).
- Professional Services (lawyers, consultants, accountants): Claims-made forms are common here because errors or omissions may not be discovered until much later.
- Healthcare Providers & Tech Firms: Claims-made coverage is often standard due to the nature of professional exposures.
Choosing incorrectly can lead to coverage gaps that leave your business exposed to costly lawsuits.
Occurrence vs. Claims-Made: Quick Comparison
| Feature |
| Trigger |
| Long-Term Protection |
| Common Uses |
| Cost |
| Occurrence Policy |
| Incident happens during policy period |
| Yes – covers claims even years later |
| General liability, contractors, retail |
| Typically higher upfront |
| Claims-Made Policy |
| Claim is reported during policy period |
| Only if reported while policy is active (or within reporting period) |
| Professional liability, E&O, EPLI |
| Often lower initial premium but can increase over time |
Making the Right Choice
Both policies have advantages and limitations. The right one for your Colorado business depends on your industry, contract requirements, and risk tolerance.
Because every business situation is different, it’s important to review your options with a trusted insurance advisor before making changes. An advisor can help you evaluate:
- Whether you’re exposed to long-tail claims
- If your contracts require a specific policy type
- Whether you need extended reporting (tail) coverage when switching carriers
Final Word
Insurance language can be complex but making the right choice between claims-made and occurrence policies can protect your business from expensive surprises down the road.
At Conexus Insurance Partners, we work with Colorado business owners every day to match the right coverage with their specific risks. If you’re unsure which policy type fits your needs, our team is here to help.
👉 Contact a Conexus advisor today to review your liability coverage options and ensure your business is protected.