Claims-Made vs Occurrence: Why Your PI and Cyber Policies Work Differently From Your Office Fire Policy
You finished the project in 2024. The client signed off, paid, and moved on. In June 2026 their lawyer writes to say the work was defective and they want RM600,000.
Whether you are covered turns on one word in your policy, and it is a word nobody points out when you buy.
Malaysian commercial policies use two triggers: claims made and occurrence. This page explains which of your policies uses which, what a claims-made policy quietly requires you to do, and the contract phrase that creates a gap no insurer created.
Not sure which trigger your policy uses?
Send us the schedule. You will get back a plain answer on the trigger, the retroactive date and what happens if you switch insurer. Most of this sits around professional indemnity insurance.
Key Facts: Claims-Made and Occurrence Cover in Malaysia
What is a claims-made policy? A policy that responds to claims first made against you while the policy is in force, whenever the underlying mistake happened. Professional indemnity, technology errors and omissions, cyber and directors and officers cover in Malaysia are written this way.
What is an occurrence policy? A policy that responds to injury or damage that happened during the policy year, whenever the claim arrives. Public liability and office fire cover work this way, which is why a 2024 policy can still pay a 2027 claim.
Who needs to care about the difference? Anyone who has changed insurer, is thinking of stopping cover, or has signed a contract that names a trigger. A consultancy that lets professional indemnity lapse loses cover for every year of past work at once, not just the year ahead.
Is either trigger required in Malaysia? No statute requires you to buy either. The trigger is set by the wording your insurer issues, and the only instrument that can force a particular trigger on you is your client's contract.
What does the difference cost? On a claims-made policy, stopping cover is the expensive event rather than starting it. A technology professional indemnity wording currently bound in the Malaysian market, 2025 edition, gives 90 days after expiry to notify a circumstance at clause 6.1.1, and prices anything longer as a multiple of your annual premium.
Last verified: August 2026. Checked against the First Schedule to the Stamp Act 1949 (Act 378), the Financial Services Act 2013, and Malaysian professional indemnity and cyber wordings currently in the market, 2025 editions.
The same mistake, three years apart
Take one set of facts and run it through both triggers. A Kuala Lumpur software firm ships a billing module in March 2024 with a rounding error in it. The client discovers the error in June 2026 and claims RM600,000.
Under a claims-made professional indemnity policy, the year that matters is 2026, because that is when the claim was first made. Four things then decide the outcome:
- Is a professional indemnity policy in force on the day the claim arrives? If cover stopped in 2025, there is nothing to claim against, even though the work was insured when it was done.
- Is the retroactive date on the 2026 policy on or before March 2024? If the retroactive date is later, the 2024 work is excluded.
- Was the firm already aware of the problem before the 2026 policy started? Known circumstances belong to the earlier policy year, and insurers ask about them at renewal for exactly this reason.
- Was the claim notified in time? Late notification is not a technicality on these wordings, it is a condition precedent to the insurer's liability.
Under an occurrence policy the question is much shorter. Was there a policy in force in March 2024, when the thing happened? If yes, that 2024 policy pays, even if the business closed in 2025 and bought nothing since.
That is the whole difference, and it explains a pattern Malaysian business owners run into constantly. Letting public liability lapse creates a gap going forward. Letting professional indemnity lapse creates a gap going backwards, across every year you ever traded.
Which of your policies is which
This table sets out how the common Malaysian commercial covers are ordinarily written. Endorsements can change any of it, so the schedule you hold is the authority, not this list.
| Cover | Usual trigger in Malaysia | What decides the policy year |
|---|---|---|
| Professional indemnity | Claims made | The date the claim is first made against you |
| Technology errors and omissions | Claims made | The date the claim is first made against you |
| Cyber and data security | Claims made, usually with a discovery condition on first-party costs | The date of the claim, or of discovery for your own response costs |
| Directors and officers liability | Claims made | The date the claim is first made against the director |
| Public liability | Occurrence | The date the injury or damage happened |
| Office and shoplot fire | Occurrence, on a stated-perils basis | The date of the fire or other insured peril |
| Burglary and theft | Occurrence | The date of the loss |
| Group personal accident | Occurrence | The date of the accident |
The rough rule holds up well. Cover for something that happens to property or to a person is written on occurrence. Cover for something you might have got wrong is written claims made, because a professional mistake often has no visible moment and can surface years later.
Malaysian law already treats them as different animals
The split is not an insurer convention invented recently. The First Schedule to the Stamp Act 1949 (Act 378) has classified policies by what they respond to since long before anyone wrote a technology errors and omissions wording.
A liability policy sits at Item 6(a), the Third Party Policy, described as one:
"Covering liability of the insured towards others"
Source: First Schedule, Stamp Act 1949 (Act 378), Item 6(a). Your professional indemnity, public liability, technology errors and omissions, cyber and directors and officers policies all sit here, and each attracts stamp duty of RM10.00.
An office or shoplot fire policy sits somewhere else entirely, at Item 2, the Fire Policy, which the Schedule applies:
"For all policies and renewals irrespective of the sum insured or the term"
Source: First Schedule, Stamp Act 1949 (Act 378), Item 2. Also RM10.00. The duty is trivial. The classification is not, because it is the clearest statement anywhere in Malaysian law that a policy protecting your property and a policy protecting you from other people are two different instruments doing two different jobs.
Four things a claims-made policy makes you do
An occurrence policy asks almost nothing of you between renewals. A claims-made policy imposes four continuing obligations, and every one of them has ended a claim somewhere.
Keep the retroactive date intact when you switch. A technology professional indemnity wording currently bound in the Malaysian market, 2025 edition, excludes at clause 4.24 any act, error or omission committed before the retroactive date unless the schedule states "Unlimited". Change insurer without carrying that date across and you can lose several years of past work in a single renewal.
Notify circumstances, not just claims. The same wording requires notice of a claim, of an intention to claim, or of a circumstance that might give rise to one, as soon as reasonably practicable, at clause 6.1.1. A complaint email that has not yet become a claim is often a circumstance. Reporting it moves the matter into the current policy year and out of the way of next year's renewal question.
Answer the renewal question honestly and in full. Every claims-made renewal asks what you know about. Schedule 9 of the Financial Services Act 2013 sets the duty for a business buyer, and it is wider than most people expect. A company policy is never a consumer insurance contract, so the softer consumer remedies do not apply to it.
Decide deliberately what happens when you stop. If you wind down, sell, or simply stop buying, the cover for all your past work stops at the same moment. The wording above gives 90 days after expiry to notify a circumstance where the policy is not renewed, at clause 6.1.1, and anything longer is a paid extension priced as a multiple of your annual premium rather than as a separate rate.
Changing insurer, or thinking of dropping a policy?
The retroactive date and the notification window are the two things that go wrong at that moment. We can check both before you commit, alongside your other SME business insurance.
The contract phrase that creates a gap
Malaysian client contracts regularly ask for professional indemnity or errors and omissions cover expressed on an occurrence basis. The phrasing varies, but it usually amounts to requiring cover for each occurrence giving rise to a claim.
That asks for a trigger the Malaysian product does not have. A supplier who signs it, buys an ordinary claims-made policy, and later has a dispute has a mismatch between what the contract promised and what the policy does. No insurer caused that gap. It was drafted in.
This table shows what to do with the wording rather than what is wrong with it.
| What the clause asks for | What is actually available | What to offer instead |
|---|---|---|
| Professional indemnity on an occurrence basis | Claims-made cover only | Claims-made cover with a retroactive date on or before the engagement start date, stated in the clause |
| Cover maintained for two years after completion | Continuous renewal, or a purchased extension | An undertaking to keep claims-made cover in force with the retroactive date preserved for the stated period |
| Public liability on a claims-made basis | Occurrence cover, which is broader here | Point out that occurrence cover gives the client more, not less, and leave the wording as occurrence |
| A single clause naming both covers on one trigger | Two policies on two different triggers | Split the clause into two sentences so each cover carries its own trigger |
Is one trigger better than the other?
For the buyer, occurrence cover is simpler and safer, because the protection you bought in a given year stays bought. Claims-made cover concentrates all of your exposure into whichever policy happens to be live when a letter arrives.
You do not get to choose. Professional indemnity, technology errors and omissions, cyber and directors and officers cover are written claims made across the Malaysian market, and an insurer will not rewrite the trigger for a small or medium business. The practical decision is not which trigger to buy, it is what to do about the consequences of the one you are given.
| Situation | On an occurrence policy | On a claims-made policy |
|---|---|---|
| You stop trading | Past years remain covered for what happened in them | Cover for all past work ends with the policy unless you buy an extension |
| You switch insurer | Low risk. The old years sit with the old insurer | High risk. The retroactive date must carry across or past work drops out |
| You raise your limit this year | Only helps for events from now on | Helps for claims made from now on, including claims about older work |
| You hear a client is unhappy | Nothing to do yet | Notify it as a circumstance before your renewal date |
| A dispute over a declined claim | Usually about the facts of the loss | Often about dates: the retroactive date, prior knowledge, or when notice was given |
If a dispute with a licensed insurer cannot be settled directly, a small Malaysian business may be able to take it to the Financial Markets Ombudsman Service, which since 1 January 2025 is the body formed from the consolidation of the Ombudsman for Financial Services and SIDREC. Eligibility depends on your size and the amount in dispute, so check the current scope before assuming your company qualifies.
FAQ
Is professional indemnity insurance in Malaysia claims made or occurrence?
Claims made. Professional indemnity and technology errors and omissions cover in the Malaysian market respond to claims first made against the insured during the period of insurance, subject to the retroactive date on the schedule. Occurrence-based professional indemnity is not something an ordinary Malaysian small or medium business can buy, which matters if a client contract asks for it.
What happens to my past work if I cancel a claims-made policy?
Cover for that past work ends when the policy ends. There is no residual protection sitting in the earlier policy years, which is the single biggest difference from an occurrence policy. If you are closing the business or stopping cover, ask about an extended reporting period before expiry, because the window to buy one closes shortly afterwards.
Does my office fire policy work the same way as my professional indemnity policy?
No. An office or shoplot fire policy responds to a fire or other insured peril that happens during the policy year, whenever the claim is presented. A professional indemnity policy responds to a claim presented during the policy year, whenever the mistake was made. The two are triggered by different events at different times.
My contract asks for errors and omissions cover on an occurrence basis. What do I do?
Ask for the trigger to be corrected before signature, and offer replacement wording. The usual substitute is claims-made cover with a retroactive date on or before the start of the engagement, maintained for a stated period afterwards. Clients accept this regularly, because it gives them what the clause was reaching for and can actually be evidenced.
What is a circumstance, and why does my policy want to know about it?
A circumstance is something that has not yet become a claim but might, such as a complaint, a threat to sue, or a discovered error a client has not raised yet. Notifying it links the matter to the policy year in which you reported it. Without that link, the claim may arrive in a later year in which the insurer has already excluded anything you knew about.
Does a claims-made policy cover work I did before I bought it?
Only back to the retroactive date shown on your schedule. Anything before that date is excluded. Where the schedule says "Unlimited" or names a date matching your first year of trading, your history is covered; where it names the date you bought the policy, none of your past work is.
Contingent Conclusion
Two triggers, two different questions. An occurrence policy asks when the thing happened. A claims-made policy asks when the letter arrived, then asks three further questions about dates before it pays.
For most Malaysian small and medium businesses the practical consequence is narrow and worth acting on. Do not let a claims-made policy lapse without a decision, and never change insurer without confirming in writing that the retroactive date has carried across. Those two habits protect more value than any increase in limit.
Contingent helps Malaysian businesses get the cover their contracts and landlords require. Whether you're comparing options or checking whether your existing policy actually does what the contract asks, we can help.
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Related reading: our guide to professional indemnity insurance in Malaysia, PI for IT consultants and software companies, cyber insurance in Malaysia, office fire insurance, and public liability insurance.
Primary sources: the Laws of Malaysia portal of the Attorney General's Chambers for the Stamp Act 1949 (Act 378) and the Financial Services Act 2013, and the Financial Markets Ombudsman Service for its current scope and monetary limit.
Published by Contingent, the commercial insurance brand of Emerge Insurtech (Malaysia) Sdn. Bhd.
Disclaimer: This article describes how these policy terms commonly operate in the Malaysian market as of August 2026, with clause references drawn from wordings currently in use. Wordings differ between insurers and between policy years, and endorsements can delete or amend any clause described here. Always read your own schedule and endorsement pages, and consult a qualified insurance professional before relying on any of it.
