8.3 Occurrence vs. Claims-Made Triggers

What a Coverage Trigger Does

A coverage trigger answers the question: which policy period must respond to this loss? Because liability claims (especially bodily injury from disease or defective products) can surface years after the underlying act, the trigger is decisive. ISO writes the Commercial General Liability policy two ways:

• CG 00 01 — occurrence form (the standard, current edition CG 00 01 04 13).
• CG 00 02 — claims-made form.

Trap: On an occurrence form the date of the claim does not matter — only the date the injury occurred. Reverse that logic for claims-made.

The Retroactive Date and Trigger Scenarios

A claims-made policy carries a retroactive date. Coverage applies only if both are true: the injury occurred on or after the retro date, and the claim is first made during the policy period (or an applicable tail).

Occurrence scenario. A 2024 occurrence policy. A customer is injured in December 2024 but does not sue until 2027. The 2024 policy responds because the injury occurred in 2024 — even though that policy expired years earlier.

Claims-made scenario. A 2025 claims-made policy with a retroactive date of January 1, 2021.

• Claim made in 2025 for a 2022 injury → covered (injury after retro date; claim in-period).
• Claim made in 2025 for a 2019 injury → NOT covered (injury predates the retro date).
• Injury in 2025 but claim first made in 2028 with no tail purchased → NOT covered (claim made after the policy ended).

Trap: Advancing or 'stepping forward' the retroactive date when renewing can silently strip coverage for prior acts. The exam treats this as an improper practice the insured should resist.

Extended Reporting Periods (Tails)

Claims-made policies need a way to cover claims that arrive after the policy ends. That is the Extended Reporting Period (ERP), or 'tail.'

• Basic ERP (mini-tail) — automatic and free. It covers claims for occurrences already reported, plus claims first made within a short window (commonly 60 days) after termination, and within 5 years for occurrences reported during the policy.
• Supplemental ERP (full tail) — purchased by endorsement, provides an unlimited reporting period for prior-acts claims. It must be requested within 60 days of cancellation or non-renewal.

Why occurrence is generally better for the insured: built-in tail means no gap when switching carriers, and one occurrence policy can pay claims decades later as long as the injury occurred in its term. Claims-made is used where long-tail exposure must be cost-controlled (professional liability, products), but it demands careful management of the retro date and ERP to avoid gaps.

Switching Carriers Without a Gap

The danger zone for an insured is moving from a claims-made policy to a new carrier. If the old policy ends and no tail is bought, a late-reported prior-acts claim falls into a gap. Two solutions:

• Buy a supplemental ERP (tail) from the departing carrier for prior acts, or
• Have the new carrier issue a policy with prior-acts ('nose') coverage by setting the retroactive date back to the original date.

Occurrence forms avoid this entirely because each year's policy permanently owns that year's injuries. This is the practical reason the exam favors occurrence coverage as 'cleaner' for the insured.

The Five Claims-Made Reporting Scenarios

ISO claims-made coverage is governed by the interplay of the retroactive date and the policy period. Examiners build a grid of cases; memorize the outcome of each:

Quick Answer: A claims-made policy pays only when the injury is on or after the retroactive date AND the claim is first made during the policy period or a valid ERP. Fail either test and there is no coverage.

Reading 'Laser' Endorsements and Advancing Retro Dates

Two insurer practices can quietly strip claims-made coverage, and the exam treats them as something the insured should resist:

• Advancing (stepping forward) the retroactive date at renewal moves the cutoff later, leaving prior-acts exposures uninsured. A properly renewed claims-made policy should keep the original retro date.
• Laser endorsements exclude a specific known claim, person, or location from coverage going forward.

When switching carriers, the insured protects continuity by buying a supplemental ERP (tail) from the departing insurer OR securing prior-acts ('nose') coverage from the new insurer that sets the retro date back to the original inception. The trap the exam loves: an insured drops a claims-made policy, buys no tail, and a prior-acts claim arrives — the answer is that the loss falls into an uninsured gap. Occurrence forms never face this because each year's policy permanently owns that year's injuries.