What Is An Occurrence?

Insurance policies, no matter whether they are designed to protect cars, homes warehouses, factories, boats, offices, etc., have to have an event take place before they respond. Naturally the event has to involve a lost to property or injury to persons which are eligible for coverage under a given policy. Such an event is often called an “occurrence,” and it may sometimes be a defined term.

More often, the normal meaning of the term applies. In other words, an action or incident that takes place, happens. However, while the meaning can appear simple, the nuances can be quite important. Under an “Occurrence Policy,” timing is critically important. Such policies not only require that the incident be the type that falls under the type of coverage provided, it also must take place during their effective dates. Both requirements must be met. It does matter if you have an accident in a car when you only have coverage for a home. It also doesn’t matter if you do have car insurance if the occurrence doesn’t take place during the policy period.

You may assume that an occurrence that matches the type of coverage and which falls within the policy period qualifies for protection. Well, that may not be the case. There could be other elements that affect whether an occurrence is covered, such as the following:

• Exclusions – Example: the auto involved in an accident is owned by you, but you never reported having the car to the insurance company, so it’s not listed on the policy.
• Exhaustion of Limits – Example: You report a fire loss involving your warehouse. The fire loss takes place within your commercial property policy’s effective dates, but it’s the fourth serious loss that has occurred and the policy limits were already used up in paying for the previous, three losses.
• Sublimits – Example: your home is broken into and, among the property stolen, is thousands of dollars’ worth of jewelry. Unfortunately, the policy has sublimits that apply for certain types of property that included jewelry, so only a small fraction of that loss is covered.
• Failure to meet Policy Obligations – Example one: Your business suffers a loss to its building and inventory. The insurance company requests records to help verify the inventory loss and, after repeated requests, you do not supply the information. The insurance denies the inventory portion of your loss. Example two: you have a party that sues your business for injuries that occur on your premises but you don’t report any information to your insurer for more than a year after receiving notice of the suit and it affects the insurance company’s ability to handle the loss property. The insurer denies the claim.

There are other instances that could affect whether an occurrence of a loss qualifies for coverage, so it is important that you understand the importance of understanding your various insurance policies. An insurance professional is a marvelous source of knowledge in such matters.

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