Understanding Claims Occurring vs. Claims Made Policies
Farm liability insurance is a vital safeguard for agricultural businesses, protecting against legal liability for personal injury or property damage occurring on the farm. However, not all farm liability policies are created equal. One of the most critical differences in the Australian insurance market is whether your policy operates on a “claims occurring” or “claims made” basis.
At Agripro Insurance Brokers, with over 20 years of experience in agricultural risk management, we help you understand these issues so you can protect your operation with confidence.
What Is Farm Liability Insurance?
Farm liability insurance provides coverage for legal costs and compensation claims if a third party- such as a contractor, supplier, or visitor- is injured or has their property damaged in connection with your farm operations. This could include incidents involving:
- Contractors slipping or falling on-site
- Livestock causing accidents on public roads
- Damage to a neighbouring property from spraying or irrigation
It’s essential that your policy aligns with the way your business operates and accounts for how and when claims might arise.
Claims Occurring vs. Claims Made: What’s the Difference?
Claims Occurring Policies (Preferred for Farm Operations)
A “claims occurring” policy responds based on when the incident happened, not when the claim is lodged. If an incident occurs during the policy period- even if the claim is submitted years later- coverage is provided by the insurer in place at the time of the event.
Advantages:
- You’re covered by the insurer who was on risk when the incident happened, even if you’ve since changed insurers.
- No need for ongoing “run-off” cover if you change providers.
- Greater certainty for long-term liabilities.
Disadvantages:
- Claim payout is limited to the sum insured at the time of the incident, which may be outdated if costs have risen significantly.
Claims Made Policies (Higher Risk for Farmers)
A “claims made” policy responds based on when the claim is made, not when the incident occurred. Coverage is only triggered if the claim (or a potential claim) is reported within the current policy period.
Advantages:
- The liability limit is based on the current sum insured at the time of claim.
- May offer lower upfront premiums.
Disadvantages:
- All incidents must be reported during the policy period, even if they seem minor or unlikely to result in a claim.
- High risk of claims being denied for non-disclosure.
- Run-off cover is required if changing insurers to avoid gaps in coverage.
- Difficult to manage across large operations with multiple managers and employees.
Real-Life Claim Scenario: Claims Occurring vs. Claims Made
Incident: A stockfeed delivery driver slips and falls on a farm. The farmer checks on him, and the driver continues working. Six months later, a $1 million claim is received from WorkCover for lost income and medical expenses.
Under a Claims Occurring Policy:
- The incident occurred under the previous insurer, so that insurer responds- even though the claim was lodged in a new policy period.
- The farm is covered based on the liability limit in place at the time of the incident.
Under a Claims Made Policy:
- The incident was not reported during the original policy period.
- The insurer declines the claim due to non-disclosure of a potential claim.
- The farm is left exposed to a significant financial liability.
Why Claims Occurring Policies Are Better Suited to Farms
For larger farm operations with multiple locations, vehicles, and employees, keeping track of every minor incident is challenging. Claims made policies require strict internal reporting procedures that are often difficult to implement in a practical, day-to-day farming environment.
At Agripro, we’ve seen that 25% of all denied claims under “claims made” liability policies are due to non-disclosure or reporting failures. That’s why we recommend “claims occurring” coverage for most agricultural clients.
Choosing the Right Farm Liability Insurance
When reviewing your insurance options, it’s critical to:
- Understand how your policy responds to liability claims
- Confirm whether you’re on a “claims occurring” or “claims made” basis
- Ensure your liability limits are adequate
- Work with a broker who specialises in agricultural insurance risks
At Agripro Insurance Brokers, we provide tailored liability insurance for farms across Australia- including cover for poultry farms, feedlots, cropping operations, and livestock transport.
Speak with a Specialist
If you’re unsure whether your current policy provides the right type of cover- or if you’d like a second opinion—our team is here to help. We specialise in building robust liability programs for farms of all sizes, with access to Australia’s leading insurers.
Contact us today for a tailored farm liability insurance quote or risk review.