Claims Made vs Occurrence Basis Insurance UK Explained
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Two Policies, Two Different Triggers
Two insurance certificates can sit in the same drawer and behave in completely opposite ways when a claim arrives, because they are triggered by different things. One responds to when the damage happened. The other responds to when the claim was made.
That is the whole of claims made vs occurrence cover, and it decides whether a policy you paid for years ago is any use to you now.
This explains both triggers, where each one applies, and the three situations where UK small businesses most often discover they are on the wrong side of the distinction: switching professional indemnity insurer, taking a career break, and stopping work altogether.
What Occurrence Basis Means
An occurrence-based policy responds to injury or damage that happened during the policy period, whenever the claim eventually arrives. Switch insurer, cancel the policy, close the business, and that insurer is still the one that has to answer for the period it covered.
Public liability, employers’ liability and product liability normally work this way.
The Trigger Is the Damage, Not the Work
This is the part most people get wrong, and it matters most to trades.
A typical liability wording covers injury or damage occurring during the period of insurance. Not work carried out during the period. If you install something in 2021 and it causes damage in 2025, the policy on risk is the one covering 2025, not 2021.
Where damage is gradual, it can straddle several policy years and more than one insurer, which is why progressive damage claims often involve an argument about apportionment rather than a single obvious respondent. Tell your insurer about it and let them work out who pays what.
One related limit, since it causes more disappointment than anything else: public liability covers damage caused by your work, not the cost of putting your own defective work right. The leak damages the floor below, and that is a claim. Ripping out and redoing your own installation is not.
Employers’ Liability: The Long-Tail Case
Employers’ liability is the clearest illustration of why the occurrence trigger exists. Industrial disease takes decades to appear. Asbestos exposure in 1988 can produce a diagnosis in 2026, and the insurer who was on cover during the exposure is the one that responds, long after the policy itself ended.
Where exposure spans several employers or several policy years, liability is apportioned between them. Mesothelioma is the exception: under section 3 of the Compensation Act 2006, any responsible party is liable for the whole of the damage, so a claimant who can trace one insurer does not have to find the rest.
The 40-Year Rule Was Revoked
Most guides on this subject still say employers must keep employers’ liability certificates for 40 years. That requirement was revoked on 1 October 2008. There is no statutory retention period now.
Keep them anyway, and understand the real reason. A disease claim in 2050 will need to establish which insurer covered 2026. The certificate is the evidence, and nothing else in your records does that job. Keep them because of the occurrence trigger, not because of a rule that no longer exists.
If You Cannot Find the Old Insurer
This happens constantly with claims going back decades, and there is a system for it.
The Employers’ Liability Tracing Office runs the Employers’ Liability Database, a searchable record of employers’ liability policies that claimants and their representatives can use to identify which insurer covered a particular employer at a particular time. Coverage is most reliable for policies from 2011 onwards, when insurers became obliged to publish their data, and thinner the further back you go, depending on what each insurer retained.
Two backstops sit behind it. If the historic insurer has since become insolvent, the Financial Services Compensation Scheme covers compulsory insurance such as employers’ liability in full. And for diffuse mesothelioma specifically, where neither the employer nor its insurer can be traced, the Diffuse Mesothelioma Payment Scheme pays a tariff award based on age at diagnosis, for people diagnosed on or after 25 July 2012, funded by a levy on employers’ liability insurers. An ELTO search is required as evidence that tracing has failed.
Those are narrow. For ordinary employers’ liability claims there is no equivalent of the Motor Insurers’ Bureau, which is why an uninsured employer is sued personally.
What Claims-Made Basis Means
A claims-made policy responds to claims first made against you during the policy period, and notified to the insurer, regardless of when the work was done. The date of the work is irrelevant to the trigger. What matters is the date the claim lands.
Professional indemnity is written this way in the UK, as are directors’ and officers’ liability and most commercial management liability products.
Why It Exists
The usual explanation is that it is cheaper. The real reason is that financial loss from professional work is almost impossible to date.
If a consultant gives bad advice in 2022, the client acts on it in 2023, the loss emerges in 2025 and is quantified in 2026, when did the occurrence happen? There is no honest answer. Claims-made sidesteps the question by using a date nobody can dispute: when the claim was made. It also lets insurers close their books on a year, which is why the premium is calculated the way it is.
Claims Made, or Claims Made and Reported?
Worth checking your own wording, because there are two versions.
A claims-made policy responds to claims first made against you during the period, usually with an obligation to notify as soon as reasonably practicable, which can extend a little beyond the expiry date.
A stricter claims made and reported wording requires the claim to be both made against you and reported to the insurer within the period. A solicitor’s letter arriving in the last fortnight of the policy, reported three weeks later, can fail under that wording and succeed under the other. The phrase to look for is in the insuring clause.
Either way, late notification is far more dangerous on claims-made cover than on occurrence cover. Notify immediately and in writing.
Claim or Circumstance? The Distinction That Saves People
This is the single most useful thing on the page, and almost no guide includes it.
Claims-made policies do not only respond to claims. They also let you notify a circumstance that might give rise to a claim. Once you have properly notified a circumstance, any claim that later arises from it is treated as having been made during that policy year, even if it actually arrives years afterwards. Insurers call this deeming, and it is what makes the mechanic survivable.
The practical consequence: the angry email, the project that ended badly, the invoice the client is disputing on quality grounds. None of those is a claim yet. All of them are circumstances, and all of them should be notified before the policy year ends.
This matters most in two moments. When you switch insurer, notify anything you know about to the outgoing insurer first. When you stop trading, notify everything you know about before the final policy expires, because run-off cover handles the unknown and notification handles the known.
Retroactive Dates and the Switching Trap
Most claims-made policies carry a retroactive date: the earliest date from which past work is covered. Work done before it is excluded even if the claim arrives while the policy is live.
On a first policy, the retroactive date is usually the start date. On a transfer with no gap, a new insurer will often agree to match or inherit the previous one. The problem arises when it does not.
Three ways a hole opens:
- The policy lapses, even briefly, and the new retroactive date is set at the new start date
- A new insurer declines to match your existing retroactive date
- You move to a policy with a later retroactive date without noticing, because nobody drew attention to it
In each case there is a block of past work with no cover behind it. The old insurer declines because the claim was not made during its period. The new insurer declines because the work predates its retroactive date. Both are right.
What to Do When Switching
- Ask every quoting insurer what retroactive date they are offering, in writing, before you decide
- Push for a date matching the inception of your first ever professional indemnity policy
- Keep renewals seamless, with no gap at all between policies
- Notify any known circumstance to the outgoing insurer before the switch
- Check whether the limit is per claim or in the aggregate while you are at it, because comparing quotes on headline price alone hides both of these
The Exclusion Nobody Mentions
Every claims-made policy excludes claims and circumstances you already knew about when the policy started. It has to, or you could buy cover after the complaint arrives.
That exclusion does more damage than retroactive dates, because it cannot be negotiated away and it catches the specific people who most need cover: the ones who have just had a difficult project. If a client complained in writing in March and you took out a new policy in June without disclosing it, the new insurer is not on risk for it, whatever the retroactive date says.
Some policies, including the Solicitors Regulation Authority minimum terms, include a continuous cover provision that can rescue a circumstance notified late where the same insurer has covered you throughout. It is not standard, and it is worth knowing whether you have it.
Claims Made vs Occurrence: Side by Side
| Occurrence basis | Claims-made basis | |
|---|---|---|
| What triggers cover | Injury or damage occurring in the period | Claim first made against you in the period |
| Typical covers | Public liability, employers’ liability, product liability | Professional indemnity, D&O, management liability |
| Does the date of the work matter? | No, only the date of the damage | No, but the retroactive date does |
| Are old policies still live? | Yes, indefinitely | Only through notifications made while they were in force |
| Risk when switching insurer | Low | High: retroactive dates and known circumstances |
| What happens when you stop | Historic years remain covered | Nothing is covered unless you buy run-off |
| Why keep old certificates | To identify which insurer was on risk | Less critical, but keep schedules for retroactive dates |
Three Scenarios
The Slow-Burn Water Damage Claim
A plumber installs a bathroom in 2021. A concealed joint weeps, and damage to the floor and the ceiling below is discovered in 2026.
Public liability responds, but the policy on risk is determined by when the damage occurred, not when the work was done. If the leak began in 2024, the 2024 and subsequent policies are in play, not the 2021 one. The plumber notifies the current insurer and lets them establish the period. Having switched insurers in between does not break the cover, but it does determine who handles it.
The cost of redoing the plumber’s own joint is not covered. The damage it caused is.
The Late-Arriving Negligence Claim
An IT consultant specifies a system in 2022. It fails in 2024. The client sues in 2026.
The 2022 insurer does not respond, because no claim was made in 2022. The 2026 insurer responds only if the retroactive date predates 2022 and the consultant did not already know about the problem when the 2026 policy started.
That second condition is where this example usually fails in real life. The system failed in 2024. If the consultant knew in 2024 that it had failed and the client was unhappy, that was a circumstance, and it should have been notified to the 2024 insurer. Notified then, it is covered. Carried quietly into two renewals, it is a known circumstance the current insurer never agreed to cover.
The Career Break
A freelance accountant lets her professional indemnity lapse in June 2024 and resumes cover in June 2025. A former client complains in September 2025 about advice given in 2022.
The 2022 insurer: no claim was made during its period. The 2025 insurer: the retroactive date is almost certainly June 2025, so 2022 work is outside it.
She is uninsured for that claim despite having held cover when she did the work and holding cover when the complaint arrived. This is common among people taking parental leave, caring breaks or sabbaticals, and the fix is cheap: a reduced or dormant policy that keeps the retroactive date alive rather than a clean break.
Cyber Insurance Is Usually Both
Cyber is routinely described as claims-made, which is half right and misleading in the half that matters.
Third-party sections, covering claims by customers or regulators arising from a breach, are generally claims-made. First-party sections, covering incident response, forensics, data restoration, ransomware and business interruption, usually trigger on discovery of the incident during the policy period, and they often carry notification windows measured in hours through a response hotline rather than anything as relaxed as a policy year.
So a business that has a ransomware incident is not asking when the claim will be made. It is asking whether the incident was discovered during the period and whether it called the hotline fast enough. Read the two sections separately in any cyber policy you are considering.
Healthcare is similarly mixed. The medical and dental defence organisations’ discretionary indemnity and the state-backed NHS schemes work on an incident-occurring basis, while commercial medical malpractice products are typically claims-made, which is a large part of why practitioners compare the two so carefully.
Do You Need Both Types?
Most professional service businesses need one of each, because they cover different things.
Public liability on an occurrence basis handles physical risk: injury and property damage at client sites, events and your own premises. Professional indemnity on a claims-made basis handles financial loss from your advice and work.
A designer who trips a client’s visitor over a cable is a public liability claim. A designer whose logo infringes a trademark is a professional indemnity claim. Neither policy substitutes for the other.
Employers’ liability is compulsory from your first employee. Professional indemnity is compulsory for solicitors, accountants in practice, architects, financial advisers and several other regulated professions, as a condition of licence rather than by general law, and it is frequently required by client contracts whether or not a regulator demands it.
FAQ
If I cancel professional indemnity, am I covered for past work?
No, not automatically. Any claim made after cancellation has no policy to respond to, however long you held cover beforehand. You need run-off cover, and you should notify everything you already know about before the final policy expires.
Does public liability ever work on a claims-made basis?
It is uncommon in the UK but not unknown, and some combined and contractors’ policies have unusual wordings. Check the insuring clause, and ask your broker to confirm in writing if it is not clear.
How do I find out which insurer covered my business years ago?
For employers’ liability, search the Employers’ Liability Database run by the Employers’ Liability Tracing Office. For other covers, your own records are the only route, which is the practical argument for keeping every schedule and certificate indefinitely.
What is the difference between a claim and a circumstance?
A claim is a demand for compensation made against you. A circumstance is something that might become one: a complaint, a dispute, a project that went wrong. Both should be notified, and notifying a circumstance while the policy is live protects you even if the claim arrives years later.
I am winding down. What do I actually need to do?
Notify every circumstance you know about to the current insurer before expiry. Arrange run-off for professional indemnity, cyber and D&O before the policy lapses, and before dissolving a company. Your public liability and employers’ liability history stays covered without further action, so keep the certificates and let the policies end.
How long should I keep employers’ liability certificates?
There is no legal requirement, since the 40-year rule was revoked in 2008. Keep them indefinitely anyway, because a disease claim decades from now will turn on identifying the insurer that covered the exposure.
Claims Made vs Occurrence: The Bottom Line
Occurrence cover is triggered by when the damage happened, and the trigger is the damage rather than the work, which matters whenever a defect takes years to show. Those historic years stay covered permanently, so the certificate identifying the insurer is worth more than any retention rule.
Claims-made cover is triggered by when the claim arrives. Three things decide whether it responds: the policy is live, the work postdates the retroactive date, and you did not already know about the problem when the policy started. All three have to hold.
Which produces one habit worth more than everything else here. The moment something looks like it might turn into a complaint, notify it in writing to the insurer on risk at that moment. It costs nothing, it cannot be taken away by a renewal or a switch or a decision to stop trading, and it is the only part of the mechanic that is entirely in your hands.
This article is general information about insurance and UK law, not advice, and it does not take account of your circumstances. Policy wordings, limitation periods and regulatory requirements vary and change. Read your own policy and speak to an FCA-authorised broker before relying on anything here.