What is the main difference between an 'occurrence' and a 'claims-made' policy?

The main distinction between an "occurrence" policy and a "claims-made" policy lies in the timing of when incidents are covered and when claims must be reported.

An occurrence policy provides coverage for incidents that occur during the policy period, regardless of when the claim is filed. This means that if an event resulting in a claim happens while the policy is active, the coverage applies even if the claim is made after the policy has expired. This type of policy offers a level of assurance to the insured as they are protected for events that occurred while they were actively covered, without concern for when the claim is actually reported.

On the other hand, a claims-made policy only provides coverage when both the incident occurs and the claim is made during the policy period. This means that if an event occurs but the claim is not reported until after the policy has expired, there would be no coverage.

The other options mentioned highlight aspects that do not accurately define the fundamental difference between the two policy types. Cost, the types of damages covered, or the applicability to personal versus business insurance do not fundamentally capture the primary time-related difference that distinguishes occurrence policies from claims-made policies. Thus, understanding the timing of coverage and claims reporting is crucial for anyone studying insurance.