Firms operating in the health and care sector need to be aware of the critical distinction between ‘claims made’ and ‘claims occurring’ insurance policies. The warning comes from insurance broker, James Bright, from the health and care division of independent insurance broking and risk management specialist, TL Dallas.
James said: “This distinction is crucial for policyholders to understand, as it affects how and when they are protected. Not having the appropriate insurance cover in place could result in claims not being paid out. The role of a good insurance broker is to explain the difference between the two types of cover, and to make this complicated matter as clear as possible.”
A ‘claims occurring’ insurance policy provides coverage for when the incident occurred, even if it is made after the policy has expired. There is no need for a retroactive date or an extended reporting period with ‘claims occurring’ policies because they cover any incident that happened during the policy term, regardless of when the claim is reported.
In contrast a ‘claims made’ policy is based on when the claim is made and must have been notified to insurers within that policy period. This policy puts the onus on the policyholder to make sure any incidents that could give rise to a claim have been raised to avoid a claim being rejected.
James added: “We usually recommend that operators in the health and care sector choose a ‘claims occurring’ policy if possible. This is because if a claim occurred in the past, the insurer providing the cover at the time is liable to pay the claim. Some insurers will accommodate a retroactive date if they are made aware that the client is currently on a ‘claims made’ policy and they need to cover the gap. However, this might be costly depending on the numbers of years required.
“The key is for the health and care operator to understand what type of policy they have in place and to give careful consideration when changing insurers. Alternating between the two types of policies can cause major problems. It’s also worth noting that some insurers will only provide cover on a ‘claims made’ basis. This type of policy is a good option in some instances, especially if it’s the type of cover that’s been in place historically, but health and care operators should seek the advice of a specialist broker to make sure there are no gaps in cover.
“For ‘claims made’ policies, this also means making sure that there is a strict reporting procedure in place for any health and care business, so that all potential instances where a claim could arise are reported to a responsible person within their business to then be passed onto the insurer. Understandably, this can be very onerous on the business to make sure they implement the necessary procedures and provide the training needed to all employees across the business.
“We have had an incident historically where we took over a new client who was previously on a ‘claims made’ policy. Unfortunately, the client was not informed by the previous broker that all instances that could give rise to a claim during the policy period should have been notified, not just a potential claim. A historic abuse allegation has now come to light and turned into a claim, the insurer is refusing to cover the claim given that this incident was known about at the time, but the information was not passed on to the insurer.”
TL Dallas provides insurance services to care homes, domiciliary care providers, supported living and day care providers, children’s homes, foster care agencies, hospices, retirement homes, dental practices and GP surgeries, as well as providers of complementary and alternative therapies.
The firm partners with numerous care associations across the UK, which are independent membership groups. The partnerships allow TL Dallas to share knowledge around risk management as well as health and safety guidance, to help clients navigate claims.
TL Dallas also works closely with other industry experts including solicitors, risk management professionals and Care Quality Commission (CQC) advisors to help provide a wealth of knowledge and relevant guidance to clients. Click here for more info – https://www.tldallas.com/health-and-care-insurance/