What is meant by occurrence? This term is used often in insurance wordings and it does affect how claims are paid out.

In the simplest respect an occurrence means each time that something happens. If you were unfortunate enough to have a break-in at your home on the Monday and then another break-in on the following Tuesday then this would be regarded as two separate occurrences. Each would have a deductible applied and each could affect your rating.

When you are talking about the commercial general liability (CGL) portion of a business insurance policy this can have a different meaning. In regards to an accident it can be a single event or a repeated or continuous exposure to conditions which results in property damage or bodily injury that was not intended nor expected by the insured.

In insurance there is rarely anything that is straightforward when it comes to terms and coverages. There are two types of occurrence wording forms for the CGL. You need to be aware of some of the limits of the Insurance Bureau of Canada (IBC) 2100 form.

Here is some background to help you understand how claims are regarded by the insurance companies. When a claim is presented to the insurance adjuster the determination has to be made, does this trigger the policy?

A policy is triggered if the incident occurs during the policy period. The question is when did the event happen and what is the policy term? Next the adjuster looks for property damage or bodily injury as it is defined in the policy. Lastly, the exclusions, limitations and warranties are examined.

Prior to the IBC 2100 form the "old" wordings determined that the date of loss is determined by certain ways. One is the exposure theory - the first exposure to the condition that caused the damage or injury - in this case ingesting a toxic substance. Also date of loss can be determined by the actual date of the loss - called the actual injury in fact. This could be a water damage claim and the first drop of water to land on your hardwood floors. There is also when the damage manifests itself - the first stain on the floor or the start of an illness due to the ingestion of the toxin. The last is called the triple-trigger theory and it could include all of the above. This last situation can result in a "long tail" claim.

The "new" wordings no longer recognize the triple-trigger for determining which policy will respond to an alleged loss. The date of the loss is the date on which the insured becomes aware of it. This opens up the possibility that the policy limits are not sufficient and you, the insured, could now have financial responsibility at some point for your legal defense and indemnity.

Some examples of claims which could develop into a long tail could include a construction defect, an illness resulting from the chemicals in plastic water bottles or problems in health developing from lead in toys for children. All of these are current issues we hear about in the media.

Since the coverage triggers are different for these two policies so it is important to consider any "long tail" losses. A long tail loss is very complex, can occur over a long period of time and out of sight. It is difficult to know a claim will develop into a long tail ahead of time.

There is a movement within the insurance industry to adopt the "new" wordings form. If you think that it would be important to have one form or another for your business then you need to discuss this with your agent or broker.