The primary difference between an occurrence and a claims-made policy is how the policy responds in the event of a claim or suit.
Occurrence policies:
Provide coverage against claims for alleged incidents that occur while the policy is or was in force.
Offer a steady base premium that does not increase as the policy matures.
Claims-Made policies:
Provide coverage against claims for alleged incidents that both occur and are reported during the policy period.
Offer a lower premium during the early years of the policy, which steps up each year until reaching maturity in year five. While this saves some money in your early years of practice, potential coverage gaps can occur.
If you cancel your claims-made policy, you may need to purchase tail coverage to ensure a gap in coverage doesn't occur, the price of which is not known until it is purchased.