What is the difference between claims-made and occurrence policies?

Complete Guide to Claims-Made vs. Occurrence General Liability Policies

Why This Question Matters for Colorado and Utah Residents

The distinction between claims-made and occurrence policies impacts both your business’s bottom line and your long-term risk. In Colorado and Utah, unique legal frameworks and high-dollar lawsuits—such as construction defect claims or professional errors—mean choosing the right policy type can protect your business from financial exposure years after a project is complete.

• Legal Timeframes Differ: Colorado law sets a 3-year limitation period for most general liability claims, but construction defect lawsuits can emerge years after a job is done due to CDARA regulations. Occurrence policies help shield you, as long as the event happened during coverage—even if the claim shows up later.
• Regional Claim Patterns: CO and UT contractors face average general liability claims of $78,000–$227,000, with high litigation frequency. Some policies required for public contracts in Larimer County mandate occurrence coverage for construction work.
• Changing Business Needs: Employers in growing sectors like tech or services might opt for claims-made due to short-term contracts, but professionals in construction and health care are often better protected by occurrence forms, especially given Colorado’s 51.7% premium growth since 2019 driven by legal trends.

What Most People Get Wrong

Many business owners assume claims-made policies are “cheaper” and offer the same coverage—until a late-emerging claim reveals a gap. Others don’t realize that canceling a claims-made policy or switching carriers without tail coverage can leave them unprotected, even for work done years prior.

It’s also common to underestimate local contract requirements. In Colorado, failing to carry the right policy type may leave a contractor liable for post-completion defects, and some Utah contracts only accept occurrence forms for public works.

The Complete Picture

Claims-made policies cover incidents only if both the event and the claim reporting occur while the policy is active (or during an optional “tail” period). This can reduce up-front costs—at first. Occurrence policies lock in coverage for incidents that happen while you’re insured, no matter how much later a related claim is filed—even years after expiration.

In high-litigation states like Colorado, where construction defect suits may be filed long after a project, occurrence is often required for compliance and peace of mind. But for lower-risk, continually renewing professions, claims-made may be viable—if you plan transitions and purchase Extended Reporting Periods (“tail” coverage) as needed. Ultimately, it’s about matching your coverage to your business’s risk pattern and regulatory environment. An expert Colorado/Utah advisor can help you navigate the best fit for your specific operations.

Making the Right Decision for Colorado and Utah Residents

Question 1: What are my industry’s local legal/regulatory requirements?

General contractors in Colorado must often carry occurrence policies to comply with CDARA and local government contracts, while health care and law firms may be governed by other statutes. Review the specific requirements in Larimer, Weld, Salt Lake, and Utah counties before purchase.

• Confirm your county and industry requirements before making a choice.
• Check if contracts mandate a specific policy type or tail coverage.

Question 2: How likely are late-emerging claims or lawsuits in my business?

Claims in construction, consulting, and some health sectors may be filed years after the work is done—especially in Colorado, where statute allows certain lawsuits long after project completion. If risk is high, consider an occurrence policy or secure a solid extended reporting period if using claims-made.

Question 3: If I stop, sell, or change coverage, what happens to protection for my past work?

With a claims-made policy, you must report claims before the policy (or purchased tail coverage) ends. Occurrence policies “lock in” coverage for work done during the policy term, even if you retire or switch providers. Always plan for transitions—especially if you’re nearing retirement or a big business change in Fort Collins, Denver, or Salt Lake City.