8.3 Occurrence vs. Claims-Made Triggers

Occurrence vs. Claims-Made Triggers

A liability policy's coverage trigger determines which policy responds when injury or damage spans multiple policy periods. The two triggers — occurrence and claims-made — are heavily tested because they change which year's limits apply, especially for long-tail exposures like products and pollution. The standard ISO CGL Coverage Form CG 00 01 is sold as an occurrence form, while CG 00 02 is the claims-made version.

Occurrence Trigger

An occurrence policy covers bodily injury or property damage that occurs during the policy period, regardless of when the claim is filed. If the injury happens in the policy year, that year's policy responds — even if suit is brought ten years later. This is simple but creates the long-tail problem: insurers may pay claims decades after a policy expires, complicating reserves.

Claims-Made Trigger

A claims-made policy covers a claim only if it is first made against the insured during the policy period (or during an extended reporting period), provided the injury occurred on or after the retroactive date. Two conditions must both be met:

1. The injury occurred on or after the retroactive date, and
2. The claim is first made during the policy period or applicable tail.

Key Claims-Made Components

• Retroactive date — the earliest date of injury the policy will cover. Injury before this date is never covered. Advancing (moving forward) the retro date creates a gap; carriers avoid it.
• Extended Reporting Periods (ERPs/"tail") — protect against claims reported after the policy ends. The Basic (mini) tail is automatic: typically 60 days to report claims plus 5 years for occurrences known before expiration. The Supplemental (full) tail must be purchased, usually within 60 days of expiration, and provides unlimited time to report.
• Laser/maturity steps — premiums rise over the first five years ("step-rated") as the exposure period lengthens, then the policy is considered "mature."

Comparison Table

Worked Timing Example

A claims-made policy runs 1/1/2026–12/31/2026 with a retroactive date of 1/1/2023. A worker is exposed to a harmful substance in 2024 (after the retro date) and first sues the insured in March 2026. Coverage applies: injury is after the retro date and the claim is first made during the term. Now change the exposure to 2022 (before the retro date) — no coverage, because the injury predates the retroactive date even though the claim arrives during the term.

Exam trap: When an insured switches from claims-made to a new claims-made carrier, the new policy should keep the same retroactive date to avoid a gap; buying tail on the old policy is the alternative. Switching from claims-made to occurrence requires purchasing the supplemental tail on the departing claims-made policy.

Worked Timeline: Why the Trigger Matters

Consider a 2026 claims-made policy with a retroactive date of 1/1/2024 and a claim filed during the 2026 policy term for an injury that occurred in 2025.

• An occurrence policy responds based on when the injury happened. The 2025 policy would respond, even though the claim is filed in 2026.
• A claims-made policy responds based on when the claim is first made (2026) and requires the injury to have occurred on or after the retroactive date (2024). Because 2025 is after 1/1/2024 and the claim is made in 2026, the 2026 claims-made policy responds.

If the injury had occurred in 2023 (before the retroactive date), the claims-made policy would deny — the retroactive date bars prior acts.

Tail and Nose Coverage

Claims-made policies create timing gaps at the start and end of a relationship:

• Extended Reporting Period (ERP) — the 'tail': lets the insured report, after the policy ends, claims for injuries that happened during the policy term. A Basic ERP is automatic (a short mini-tail, e.g., 60 days); a Supplemental ERP is purchased for a longer or unlimited reporting window — vital when retiring or switching carriers.
• Prior-acts / 'nose' coverage: when switching to a new claims-made carrier, the insured negotiates a retroactive date matching the original, so old injuries remain covered.

Quick Answer: Tail = report old claims after expiration (ERP). Nose = pick up prior acts with a matching retroactive date on a new policy. Without one of these, a gap forms when changing claims-made carriers.

The Five Claims-Made Trigger Conditions

For a claims-made policy to respond, several conditions must align, and the exam tests them as a set: (1) the wrongful act/injury occurred on or after the retroactive date; (2) the claim is first made against the insured during the policy period (or an active ERP); (3) the claim is reported per the policy terms; (4) no prior knowledge of the claim existed before inception; and (5) the loss is otherwise covered.

A laser or retroactive date advance can quietly create a gap when renewing, so producers must confirm the retroactive date stays unchanged. Worked example: an insured switches carriers and the new claims-made policy is written with a retroactive date equal to the new inception (no prior acts). A claim arrives for an injury that occurred under the old policy; the new policy denies (pre-retro), and if the old policy's ERP lapsed, the insured is uncovered. Trap: advancing the retroactive date on renewal silently strips coverage for prior acts — always match the original retro date or buy tail.