What is the key difference between occurrence made and claims made policies in insurance?

The correct choice highlights a fundamental aspect of claims-made policies in insurance. A claims-made policy provides coverage solely for claims that are reported during the policy period, regardless of when the event leading to the claim occurred. This means that if an incident occurs before the policy's effective date or is reported after the policy has lapsed, it will not be covered.

In contrast, occurrence policies cover events that occur during the policy period, regardless of when the claim is reported. This means that as long as the incident takes place while the policy is active, the insurer will handle the claim even if it is made after the policy has expired, as long as the claim is the result of an event that occurred during that period.

Understanding these nuances is crucial for policyholders to choose the right type of coverage that fits their risk exposure and timing of claims.