What Is Occurrence vs. Claims Made Professional Liability Insurance for Home Care?

Professional Liability coverage is integral to a comprehensive insurance program for the home health care industry. This coverage is designed to cover claims made against a home health care provider by patients alleging negligence in providing, or failing to provide, professional services. Allegations can range from failure to monitor a patient’s condition or failure to communicate with the patient, resulting in noncompliance, a worsening medical condition or a possible negligent health education claim; to the improper administration of medication; failure to maintain equipment; improper termination of service or abandonment; and claims of abuse or molestation, among others.

There are different types of Professional Liability policies for the home care industry with various coverage endorsements and sub-limits available that requires a thorough understanding of what is available in the market. Moreover, if and when the insurance responds to a claim depends on the type of policy a home health care organization secures. It’s critical, therefore, to also understand how a Professional Liability policy is written and when coverage is triggered.

There are two ways in which Professional Liability insurance can be written: occurrence or claims made. With an occurrence-based policy, coverage will respond when an injury or damage takes place during the policy period, regardless of when the claim is reported. Basically, an occurrence policy provides long-term insurance for any covered claim that may arise at any time in the future – up to the limits of the policy in effect at the time of the alleged incident that led to the claim. For example, let’s say you purchased an occurrence-based Professional Liability policy from ABC Insurance Company with an effective date of January 1, 2012. In January 2014, you decide to obtain coverage from another insurance company, XYZ. A claim is then filed against your home health care agency in mid-June of 2014 for an incident that occurred back in November of 2012. Since the incident occurred while your policy was active with ABC Insurance this is the “occurrence” policy that would respond to the claim, not your current policy with XYZ.

With a claims-made policy, coverage is triggered by the date the insured (you) first became aware of the claim and notified the insurer. As long as you maintain continuous coverage, the insurance company underwriting the policy at the time the incident is reported (i.e. the claim is made) would be responsible for paying any covered claims. This may not be the same company at the time the incident occurred if you moved to a new insurer. The way to remain protected during times of transition is with “tail” (extended reporting period) coverage or “prior acts” coverage. Tail coverage allows you to report claims after the policy has been terminated. For example, if a past client files a lawsuit against you after your previous policy was cancelled, tail coverage provides protection retroactively for those events that may have already taken place but haven’t been reported. During the first few years, each time a claims-made policy is renewed, the premium increases automatically to account for the likelihood of claims being reported from the current and previous policy periods. Generally, claims-made coverage is offered on an annual basis.

Manchester Specialty Program offers both occurrence and claims-made Professional Liability insurance for home health care providers. Our claims-made policy can be purchased with an extended reporting feature or prior acts coverage in the event a claim is filed after the policy is terminated. We can review the advantages and drawbacks of each type of policy with your local insurance broker to determine what makes sense for your particular home health care organization. You or your local agent/broker can contact us at 855.972.9399 for more information.