If I could get every Ontario daycare operator to check one thing on their current policy this month, it would be their abuse and molestation coverage. Not the limit. The wording.
Because somewhere in the last two or three renewal cycles, most Canadian childcare policies quietly moved from occurrence wording to claims-made wording. And most operators were never told.
The Two Triggers, in Plain Terms
Occurrence Coverage
Occurrence coverage responds to incidents that happened during the policy period, regardless of when the claim is reported. Under an occurrence policy, if an incident happened in 2019 and someone reports the claim in 2027, your 2019 policy responds.
Claims-Made Coverage
Claims-made coverage responds to claims first made during the policy period, subject to a retroactive date. Under claims-made, that same 2019 incident reported in 2027 falls to your 2027 policy.
Why This Matters for Daycare Operators Specifically
Abuse allegations often surface years or decades after the underlying event. Under occurrence wording, your policy responds no matter when the claim is made. Under claims-made wording, three things have to be true: continuous claims-made coverage, incident after the retroactive date, and claim reported in the current policy period. Break any one and coverage disappears.
Why It Changed
Two forces: US settlement pressure flowing through reinsurance treaties, and carriers transferring long-tail exposure back to operators. The Canadian childcare segment ended up smaller and its wordings narrower.
The Four Questions to Ask Your Broker This Quarter
Is My Abuse Coverage Occurrence or Claims-Made?
What Is the Retroactive Date?
What Does the Tail Look Like If We Switch Carriers?
What Is the Abuse Sub-Limit and Is It Eroding?
If your broker cannot answer in one sentence each, that is signal.
What to Do If Your Wording Changed and You Did Not Know
Do not panic. Claims-made coverage is real coverage. Ask your broker for a one-page summary: occurrence or claims-made, retro date, sub-limit or standalone, erosion mechanics, tail options. Price the tail before shopping if you are considering a change.
Review Your Daycare Abuse Coverage
Chapter 4 of my new playbook covers this in depth. Download the playbook or book a 20-minute policy review.
