Glossary
Occurrence vs. Claims-Made
By LiabilityGap EditorialUpdated 2 min read
The short answer
If I'm sued years after an accident, which year's insurance policy actually pays the claim?
The occurrence policy in force on the day the incident happened, not the policy you hold today, responds to the claim — at that year's limit. Canadian personal policies are almost always occurrence-based, so a $1 million limit from years ago stays $1 million forever, even if you've since raised your coverage or switched insurers.
An occurrence policy covers incidents that happen during the policy period, no matter when the claim is filed — even years later; a claims-made policy covers only claims made while the policy is in force. It's the difference between asking when did the injury happen? and when did the lawsuit arrive? Canadian personal lines — home, auto, and personal umbrella policies — are almost always occurrence-based. Claims-made forms live mainly in professional liability: errors and omissions, directors and officers, and similar coverage where the "injury" is often discovered long after the work was done.
The occurrence form has a quiet consequence: the policy year in which the incident happened is the one that responds, at that year's limit. Upgrading your coverage today does nothing for the backyard accident that happened two years ago.
Why it matters to you#
Liability claims travel slowly. Basic limitation periods in most provinces run two years from discovery of the claim, and for injured minors the clock commonly doesn't start until they turn 18 — meaning a child hurt at your home or in your car can sue many years after the fact. Occurrence coverage is built for exactly this: the policy you held on the day of the incident answers the claim whenever it surfaces, even if you've since switched insurers or dropped the coverage. The flip side is that your limits need to be right before something happens. A $1 million limit at the time of the incident stays a $1 million limit forever, which is a strong argument for raising limits or adding an umbrella policy sooner rather than later.
In practice#
- A dinner guest slips on your icy steps in January 2024 and files suit in December 2025. Your 2024 home policy responds — at its 2024 limit.
- A ten-year-old injured in a crash you caused can, in most provinces, start a lawsuit into their twenties. The auto policy in force on the crash date answers it.
- A consultant's errors-and-omissions policy is claims-made: cancel it, and claims arriving afterward are generally uncovered without tail (extended reporting) coverage.
Frequently asked questions
What is the difference between occurrence and claims-made coverage?
An occurrence policy covers incidents that happen during the policy period, no matter when the claim is filed — even years after the policy ends. A claims-made policy covers only claims made while the policy is in force. The occurrence form asks when the injury happened; the claims-made form asks when the lawsuit arrived.
Are personal insurance policies occurrence or claims-made?
Canadian personal policies — home, auto, and personal umbrella — are almost always occurrence-based. Claims-made forms are mainly used in professional liability lines such as errors and omissions or directors and officers coverage.
Which policy year pays if I am sued years after an accident?
On an occurrence policy, the policy that was in force when the incident happened responds, at that year's limit. If you carried $1 million in 2023 and are sued in 2026, the 2023 policy and its $1 million limit apply — not whatever coverage you hold today.
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