Most discussions we see about Liability insurance focus on the annual price. But that is the WORST metric for choosing insurance. It’s time to learn the difference between Occurrence and Claims-Made policies, darn it. I promise, you’ll thank us later.
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Allissa Haines Hello, everyone. Welcome to the Massage Business Blueprint podcast, where we discuss the business side of massage therapy. I am Allissa Haines. And that pause is happening because I am flying solo today for this really quick and efficient and crazy important episode about a seemingly very boring thing. I’m not even going to banter with myself or you. I hope everyone’s having a fantastic day. That’s enough of that. We’re jumping in.
Today we’re going to talk about the difference between a claims made versus occurrence liability insurance policy and why you should care. This came up because, of course, I get asked all the time what is the best liability insurance for massage therapists. And I see this asked online all the time, and I see a big stream of comments of people saying, Well, I use this one that’s $69 a year; I use this one that’s $99 a year. In my head, I weep silently because people have chosen their liability insurance based only on the cost without understanding the intricacies of their policy. Specifically, the claims made versus occurrence.
We’re going to tackle this quickly. A claims made policy means that if you’re insurance lapses at any time — if a claim is not filed in the same period where you have the insurance coverage, you’re not covered. So what that means — it’s a little tricky to understand that way. But what it means is say you work on a client in June, and you see that client and maybe their shoulder’s a little sore and everything goes just fine. Let’s say at the end of July your policy is lapsing. But in the middle of July, you hurt yourself and decide I am going to take a couple years off from massage; I’m going to go to work for someone else; I don’t need to renew my liability insurance policy. But you worked on that client in June, and their shoulder was a little sore afterwards, and they went to a doctor who was like, Eh, maybe you got a bad massage and they broke a rib. And that client doesn’t file a claim until August 1st. They see a couple of doctors, they talk to a lawyer, and then they’re pretty convinced that their shoulder hurts because you broke a clavicle or something, and they file a claim on August 1st. Well, your coverage ended in July, July 31st. You are no longer covered. You’re not covered unless your policy is active when that claim is made.
I think you can tell by the tone of my voice that I think this is very bad. And I think that it’s very bad. I think that if you’re paying $60 or $99 or $119 or $120 for liability insurance, it’s probably a claims made policy and you should run screaming from that situation, find a better policy, make the switch, talk to an insurance agent about if there’s any kind of coverage you can buy in the interim to protect you from any claims that could be made within the statute of limitations in your state. So that’s what I think.
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AH So let’s pop back into the second part of learning about these types of insurance policies. So what is an occurrence policy? An occurrence policy will protect you from any covered incident or claim that occurs during the policy period regardless of when the claim is filed. So if I break a client’s rib in June and I decide to stop my career and let my policy lapse at the end of July, and that clients comes back in September or October because they got all their legal ducks in a row and they’re going to sue me, I’m covered. The incident occurred during my active policy period, so I am covered as long as the incident happens when that coverage was active. Which is a huge deal That is the difference. That is the reason that occurrence policies cost a little bit more. There’s a lot of insurance providers and there’s other factors to consider. We’ve done other podcast episodes and written about that previously, and I will put all of those resources in the podcast notes. But there’s a really big deal.
Anytime, please, if you’re a Massage Business Blueprint listener, anytime you see someone say what’s the best insurance and you see a whole bunch of people commenting on why they like their $49/69/99/119 insurance policy, find the link to this podcast and put it in there, or just ping me and I will do that. Because this is really, really, really important and I don’t think enough people understand it. And that is me on the pulpit for this week’s podcast episode. So we’re going to wrap it up there.
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That is it, everyone. Thank you for listening and have a wonderful day.