Choosing Indemnity Cover: Occurrence vs Claims-Made

Most surgeons choose indemnity cover the way they choose a bank: once, early, on a colleague's recommendation, and then never think about it again.

That works until it does not. Orthopaedic claims have long tails — a patient operated on today may bring a claim in eight years. Whether you are covered then depends on decisions you made now, and on a distinction most clinicians could not explain if asked.

This post covers what actually differs between policy types and where the gaps open. It sits within our medico-legal series.

The distinction that matters most

Two ways a policy can define what it covers, and they are not interchangeable.

Occurrence-based cover responds to incidents that occurred during the policy period, whenever the claim is eventually made. Operate in 2026 while covered on an occurrence basis, and a claim arriving in 2034 is covered — even if you left that insurer, changed jobs, or retired years earlier.

Claims-made cover responds to claims first made and reported during the policy period. The incident must have occurred while you were covered and the claim must arrive while you are still covered.

The consequence is stark:

Under claims-made cover, the day you stop paying, your protection for all your past work stops with it — unless you buy run-off cover.

That is the single most expensive misunderstanding in this area. A surgeon who retires, moves country, takes parental leave, or switches insurer, and does not arrange run-off, is personally exposed for every operation they have ever performed under that policy.

Run-off cover, and why it is not optional

Run-off (also called tail cover or extended reporting) continues protection for claims arising from past work after you stop practising or change insurer. It is essential — not a refinement.

You need to think about it whenever you:

• Retire — and claims can arrive for years afterwards
• Move to another country
• Take an extended break — parental leave, sabbatical, illness
• Change insurer — the new one may not cover incidents predating your policy
• Stop private practice while continuing employed work
• Die — your estate can be pursued, and cover should extend to it

Australia is worth knowing about even if you practise elsewhere, because it has a formal government mechanism: the Run-Off Cover Scheme (ROCS) reimburses medical indemnity insurers for the cost of claims against doctors who have ceased private practice through retirement, permanent disability, maternity leave, death, or leaving practice in Australia. It exists precisely because the claims-made model creates a gap that individuals could not reliably close on their own.

Most jurisdictions have no equivalent, and there run-off is something you must buy and budget for.

Retroactive date

The companion trap. A claims-made policy usually carries a retroactive date — incidents occurring before it are not covered, however long you have since been paying.

When switching insurers, the question to ask is not "what does this cover?" but "what is the retroactive date, and does it reach back to cover all my previous practice?" If it does not, you need run-off from the old policy to bridge the gap. A new policy with a retroactive date of today leaves everything before today uncovered by anyone.

Discretionary versus contractual

A structural distinction with real consequences, and one that has shifted historically.

Discretionary assistance — the traditional model of the medical defence organisations — means the organisation may assist you, at the discretion of its board. There is no contractual entitlement. In practice these bodies have long and good records, and discretion brings genuine flexibility: they can help with matters an insurance contract would exclude, such as regulatory or reputational issues that are not claims at all.

Contractual insurance gives you a legal right to indemnity for what the policy covers, and no right to anything outside it.

The market has moved substantially from purely discretionary arrangements toward regulated insurance contracts — Australia in particular shifted after its indemnity crisis, and Australian insurers now offer cover on a claims-made basis only. Many organisations today provide a contractual insurance policy alongside discretionary benefits.

Neither model is simply better. Contractual cover gives certainty within defined limits; discretionary cover gives breadth with less certainty. What matters is knowing which you hold, and not assuming a discretionary body is obliged to assist.

What indemnity covers beyond claims

A common and costly assumption is that indemnity is only about being sued. Good cover typically also supports:

For most surgeons the advice line is used far more often than the claims service — and its quality is the most useful thing to ask colleagues about.

Employer and state indemnity is not enough

In many public systems your employer indemnifies you for work done in that role — NHS clinical negligence arrangements in the UK, state indemnity schemes in Australian public hospitals, employed-physician cover in the US.

What that typically does not cover:

• Private practice, entirely
• Good Samaritan acts outside employment
• Regulatory proceedings — the employer's cover addresses the claim, not your registration
• Employer disciplinary processes, where the employer's interest may diverge from yours
• Expert witness work — see Serving as an Expert Witness
• Work outside the contract — advice to friends, charity work, overseas trips

That fourth point deserves emphasis. Where your employer is investigating you, their indemnity is not your representation. Their interests and yours may not align, and this is exactly when personal cover earns its subscription.

How jurisdictions compare

Australia is the clearest case of a legal obligation: appropriate indemnity arrangements are a condition of registration, not merely prudent.

Accurate as of July 2026. Indemnity arrangements and legal requirements vary by jurisdiction and change — confirm the current position with your provider and regulator.

What to declare, and when

Cover depends on your provider knowing what you actually do. Under-declaring is how people discover a gap at the worst possible moment. Tell them when you:

• Start private practice, or change its scope
• Take up a new procedure, particularly a novel or high-risk one
• Begin expert witness work
• Work overseas, including short trips and charity work
• Change specialty or subspecialty focus
• Change your hours — including going part-time
• Take on a leadership or management role
• Receive any claim, complaint, or regulatory correspondence — immediately, and before responding

That last one is the operative rule: contact them before you reply to anything. The most common own goal in this entire field is a well-intentioned letter sent before taking advice.

Choosing between providers

Beyond price, the questions worth asking:

1. Occurrence or claims-made? If claims-made, what is the retroactive date and what does run-off cost?
2. Discretionary or contractual — and what specifically is guaranteed?
3. What is the limit of indemnity, and is it adequate for orthopaedic claims, which can be high-value?
4. Is regulatory and disciplinary representation included, and to what extent?
5. How good is the advice line — availability, and do you speak to someone who understands surgery?
6. What is the run-off position on retirement, career break, and death?
7. Do they have specialty-specific experience? Orthopaedic claims have their own patterns.
8. What happens if you move jurisdiction?

The trainee position

If you are in training and think you do not need personal cover because your employer indemnifies you: you need it for regulatory matters, disciplinary processes, coroner's inquests, complaints, and Good Samaritan acts. Trainee rates are low, and the advice line alone justifies it.

The moment it stops being optional in any meaningful sense is the moment you do your first private list, your first expert report, or your first overseas trip.

The summary

Know whether your cover is occurrence-based or claims-made. If claims-made, know the retroactive date and arrange run-off before you stop, move, or switch — that is where the exposure actually is. Understand whether your protection is contractual or discretionary. Do not assume employer indemnity covers your registration, your private work, or a process your employer is running against you.

Declare changes in your practice as they happen, and ring them before you reply to anything. Orthopaedic claims arrive years later, and the version of you who gets that letter will be relying entirely on decisions taken by the version of you reading this.

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This article describes indemnity arrangements for educational purposes and is not financial, insurance or legal advice. Arrangements vary by jurisdiction — take advice from your provider on your specific circumstances.