Occurrence Coverage Examples

Example:

Dr. Davis buys an Occurrence policy in year ONE with $1,000,000 per occurrence/$3,000,000 annual aggregate ($1M/$3M) limits. He continuously renews the policy for two additional years.

At the end of year THREE, Dr. Davis accepts an offer from a new employer and non-renews his Occurrence Policy.

Several years after he changed employers, “Patient A” sues Dr. Davis for alleged malpractice that “occurred” during the first year he had Occurrence coverage while with his previous employer.

Application:

Dr. Davis’ new policy with his new employer will not cover him for “Patient A’s” claim. However, the Occurrence policy he had in force while with his previous employer will. In fact, Dr. Davis’ old Occurrence policy would protect him from “Patient A’s” claim, regardless of when it is filed.

If this is the first claim against Dr. Davis for incidents occurring the year he treated Patient A, he will have access to the full $1M/$3M limits of his Occurrence policy to protect him in the case.

OCCURRENCE EXAMPLE continued:

Weeks after receiving notification of “Patent A’s” claim, Dr. Davis receives two additional claims from “Patient B” and “Patient C.” The new claims allege malpractice incidents that took place during the second and third years he had Occurrence coverage while with his previous employer.

All three claims result in $1M payments.

Application:

Because he had Occurrence coverage during those years, his policy would respond to each claim with a separate set of $1M/$3M limits. All three claims could be paid up to $1M each, without exhausting limits available to protect Dr. Davis from future claims involving incidents that occurred during these same three years.

Table Illustration

Occurrence Coverage Example
$1M/$3M Policy

Patient Incident Occurred Initial Limits Award Paid Remaining Limits
Patient A Year One $1M/$3M $1M $1M/$2M
Patient B Year Two $1M/$3M $1M $1M/$2M
Patient C Year Three $1M/$3M $1M $1M/$2M

Because Occurrence policies respond to covered claims regardless of when they are filed, there is no need to purchase extended reporting period coverage — or “tail” coverage — when the coverage period ends.

Not having to buy “tail” coverage also makes Occurrence coverage easier to administer in a practice setting. Determining who will be responsible for buying tail coverage in a shift to Claims-made may require a careful review of employment agreements, partnership agreements and buy/sell agreements for medical providers and their practice entities.

The permanent nature of the protection, ease of administration and competitive pricing of Occurrence coverage, makes it a very desirable form of medical professional liability insurance. It is also becoming more difficult to find in today’s market.

The South Carolina JUA is pleased and proud to offer this comprehensive coverage to nearly all medical providers in our state.