11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates

Two Coverage Triggers, Two ISO Forms

ISO publishes the CGL in two trigger versions. The choice of trigger determines which policy responds to a loss, and it is one of the most misunderstood - and therefore most tested - concepts on the national exam.

The occurrence form ties coverage to the date of injury; the claims-made form ties coverage to the date the claim is reported.

The Occurrence Trigger and the Long Tail

Under the occurrence form (CG 00 01), the policy in force when the injury or damage took place responds, even if the claim surfaces years later. This is ideal for long-tail exposures - latent disease, slow leaks, construction defect - because a claimant who is injured in 2026 but does not sue until 2032 still draws on the 2026 policy.

Trap: Because the occurrence form must keep responding to old exposures for decades, insurers rely on the General Aggregate and careful reserving. A single 2026 policy could be tapped many years after expiration, which is why occurrence pricing carries more long-term uncertainty than claims-made.

The Claims-Made Trigger and the Retroactive Date

The claims-made form (CG 00 02) responds only if two conditions are met:

1. The claim is first made during the policy period (or an applicable reporting extension), and
2. The injury/damage occurred on or after the Retroactive Date (and before the end of the policy period).

The Retroactive Date is the line in the sand - injuries that occurred before it are never covered, no matter when the claim arrives. Advancing (moving forward) the retroactive date on renewal creates a coverage gap and is a classic exam trap; a properly maintained claims-made program keeps the same retroactive date year after year.

Worked Trigger Comparison

A contractor's defective work in 2024 is discovered and a suit is filed in 2027. Which policy pays?

• Occurrence form: the 2024 policy responds (injury occurred in 2024), regardless of the 2027 filing.
• Claims-made form: the 2027 policy responds - but only if the retroactive date is 2024 or earlier. If the retroactive date had been advanced to 2025, the claim is barred (injury predates the retro date) and the insured has an uncovered gap.

Tail Coverage: Basic and Supplemental ERPs

When a claims-made policy is cancelled or non-renewed (or the retroactive date is advanced), the insured needs an Extended Reporting Period (ERP), commonly called tail coverage, to report claims for injuries that occurred during the expired policy's coverage window.

Trap: Tail coverage does not raise the limits - the supplemental ERP reinstates an aggregate equal to the expiring policy's limit but does not add new capacity beyond it.

Step-Up Pricing and First-Year (Mature) Claims-Made

A brand-new claims-made policy in year one covers only claims made in that single year for injuries on/after the retro date, so it is cheap. Each renewal steps up the price as the exposure window lengthens, until - typically by year five - the policy reaches a mature (fully developed) premium roughly comparable to an occurrence policy. The exam tests that first-year claims-made is the least expensive and that mature claims-made approaches occurrence pricing.

Switching Carriers: Nose Coverage vs. Tail Coverage

When an insured moves from one claims-made carrier to another, there are two ways to bridge the gap created by the prior coverage window:

• Tail coverage (ERP) is bought from the expiring insurer to keep reporting old-window claims after the policy ends.
• Nose coverage (prior-acts coverage) is obtained from the new insurer by setting the new policy's retroactive date back to the original retro date, so the new policy picks up claims for injuries during the prior period.

Nose coverage is usually cheaper than buying a full tail and avoids a gap, which is why exam questions on carrier changes often steer the insured toward securing prior-acts (nose) coverage rather than a costly supplemental tail.

Why Claims-Made Exists - Pricing Predictability

Claims-made forms emerged to solve the long-tail pricing problem that plagues occurrence coverage in fields like medical malpractice and professional liability, where a claim can surface a decade after the injury. By tying coverage to the reporting date, insurers reserve against claims they can see now rather than guessing about losses that may not appear for years.

Trap: Candidates often assume claims-made is 'worse' coverage. It is not inherently narrower - properly maintained with a stable retroactive date plus tail/nose coverage at transitions, it can mirror occurrence protection while giving the insurer far more rate stability and the insured a lower mature premium in volatile lines.