The difference between claims made and occurrence-based malpractice policies can feel subtle until the moment a firm faces a claim. That is when the importance of choosing the right structure becomes very clear. A malpractice policy is not simply a formality. It is the safety net that protects your clients, your finances, and your professional reputation. Understanding how these two policy types work ensures that nothing slips through the cracks.
A claims made policy focuses on the timing of the claim and the reporting. It must be both made and reported during the policy period. This model allows attorneys to cover work performed in earlier years as long as their retroactive date is preserved. Maintaining this retroactive date is essential when switching carriers or adjusting coverage, because losing it can leave a gap that affects past work. When lawyers retire, leave a firm, or close a practice, tail coverage helps extend protection for prior services. The flexibility of claims made policies is one reason they are widely used in the legal industry.
Occurrence based policies operate differently. They protect any work performed during the policy period, even if the claim arises years later. This can feel straightforward, but it typically comes with higher premiums and fewer carrier options. For many firms, especially smaller ones, availability and cost make occurrence based policies less practical.
Choosing the right approach depends on the size of your practice, your long term plans, and how frequently your firm changes structure or personnel. Firms experiencing growth, turnover, or expansion need to pay close attention to how their coverage follows them. The key is to avoid coverage gaps that only become visible when a claim appears. First Indemnity helps firms evaluate their risks and select a policy format that aligns with their goals. With a clear understanding of policy structure, attorneys can make informed choices that safeguard their practice well into the future.