What’s the difference between claims-made and occurrence coverage?
The difference is which policy responds to a claim. An occurrence policy covers any incident that happened while the policy was active, no matter when the claim is filed — even years after the policy ends. A claims-made policy covers claims filed while the policy is active, and only for incidents after its retroactive date — so keeping protection when a claims-made policy ends requires tail coverage or an unbroken chain of renewals. Most med spa professional liability we place is written claims-made, which makes these mechanics worth understanding before you sign. Medica Risk is a specialty insurance agency serving med spas and aesthetic medical practices, licensed in Washington, Oregon, and Idaho.
How does an occurrence policy work?
Each policy year stands on its own, permanently. If a patient files a claim in three years about a treatment performed this year, this year’s policy responds, even if you changed carriers or closed the practice in between. That permanence is why occurrence coverage costs more up front than a first-year claims-made policy — you are buying protection that never needs renewing for the incidents it covered.
How does a claims-made policy work?
A claims-made policy responds only if two things are true when the claim arrives: the policy (or its tail) is active, and the incident happened after the policy’s retroactive date. The retroactive date is set when you first buy claims-made coverage and — if you renew or switch correctly — carries forward unchanged, so your covered history grows each year. Claims-made premiums start lower and step up over several years as that history accumulates, then level off at what carriers call mature rates.
What is tail coverage, and when does a med spa need it?
Tail coverage — formally an extended reporting period — keeps a claims-made policy open for claims filed after it ends, covering incidents from before it ended. You need it whenever claims-made coverage stops without a successor picking up the history: closing the practice, retiring, or switching to a carrier that won’t honor your retroactive date. Skipping the tail is the classic gap: the treatment was insured when it happened, but no policy is active when the claim arrives, and the practice is bare.
What should a med spa check when switching carriers?
The retroactive date, first. A new claims-made policy that honors your existing retroactive date (sometimes called prior-acts or nose coverage) keeps the chain intact and no tail is needed. A new policy with a fresh retroactive date leaves every earlier treatment uncovered unless you buy a tail from the old carrier — so compare the price of the tail against the savings before treating the cheaper quote as cheaper. This is exactly the kind of side-by-side we do when we place coverage.
Which should a med spa choose?
When both are offered, it is a cash-flow and permanence trade: occurrence costs more early and never needs a tail; claims-made costs less early and carries tail obligations you should price in from the start. In practice the market often decides for you — many carriers writing aesthetic medicine offer claims-made only. What matters most is not which form you have but that you know which form you have, where your retroactive date is, and what your tail would cost.
Related: What insurance does a med spa need? · How much does med spa insurance cost?
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