What is the key characteristic of an occurrence policy?

An occurrence policy is designed to provide coverage for claims based on when the incident actually occurs, regardless of when the claim is reported to the insurer. This means that if an event happens during the policy period, the coverage will apply even if the claim is filed after the policy has expired, as long as the event occurred while the policy was active.

This characteristic is significant because it offers a broader protection to policyholders, ensuring that they are covered for incidents that may be reported long after they actually happen. It can be particularly important in situations where the effects of an incident may not be immediately apparent, such as environmental damage or liability claims.

The other options focus on reporting timelines, specific conditions like negligence, or loss limits that do not align with the primary purpose of an occurrence policy, which is to provide coverage based solely on the timing of the occurrence itself. This clarity is fundamental for understanding how occurrence policies work and their advantages in risk management.