What is Occurrence?
In insurance, an occurrence refers to an event or series of related incidents that result in a loss or damage covered under a policy. It can be a single incident, like a car accident, or multiple events happening over time, such as ongoing property damage due to water leakage. The key aspect of an occurrence is that it causes harm or damage that leads to a claim.
Occurrences are typically used in liability and property insurance policies. They can determine when coverage applies, especially in situations where damages or injuries might unfold over time. For instance, in homeowners insurance, if a pipe bursts and causes water damage over a week, that would be considered a single occurrence, even though the damage happened over several days.
An occurrence policy will cover incidents that happen during the policy period, regardless of when the claim is made. This is in contrast to claims-made policies, which require the claim to be filed within the policy period.
Understanding occurrences is crucial for both insurers and policyholders, as it directly impacts how and when claims are processed.