In construction, insurance is a vital tool for managing risks, but not all policies function the same way. Occurrence-based policies cover incidents that happen during the policy period, regardless of when a claim is filed. This makes them particularly valuable for long-tail risks where damage or injury may appear years after project completion. Commercial General Liability (CGL) policies are the most common example, protecting against bodily injury, property damage, and certain personal or advertising injuries arising from work performed during the coverage period. Contractors benefit from occurrence-based coverage because it provides lasting protection, though maintaining detailed records is essential to confirm coverage for past incidents.

On the other hand, claims-made policies only cover claims reported during the policy period (or an extended reporting period) for incidents occurring after the policy’s retroactive date. These policies are typically used for professional liability or errors and omissions (E&O) coverage for design professionals, engineers, and contractors offering design-build services. Because design flaws may surface long after a project is completed, maintaining continuous claims-made coverage is critical; lapses or carrier changes without prior acts coverage can leave significant gaps. Ultimately, contractors often need both types of coverage—occurrence-based for general liability and claims-made for professional liability—to ensure comprehensive protection against construction-related risks. Click here to read more.