Occurrence vs. Claims-Made CGL and Retroactive Dates
Key Takeaways
- Occurrence CGL (CG 00 01) is triggered by WHEN the injury occurs; claims-made CGL (CG 00 02) is triggered by WHEN the claim is first made and reported.
- The Retroactive Date excludes any injury occurring before it - a claim made during the policy period is still denied if the injury predates the retro date.
- Tail coverage (Extended Reporting Period) protects against claims reported after a claims-made policy ends; nose (prior acts) coverage backdates a new claims-made policy.
- Claims-made premiums rise for about five years until 'mature,' approaching occurrence-policy cost; the supplemental tail premium is often capped near 200% of the expiring premium.
- Switching from claims-made to occurrence (or to no coverage) requires buying a tail to avoid a gap for late-reported prior-period claims.
The Coverage-Trigger Question
The CGL is sold on two trigger forms, and the difference - what event activates coverage - is one of the most reliably tested commercial-lines concepts. ISO publishes the CG 00 01 (occurrence form) and the CG 00 02 (claims-made and reported form).
| Trigger | What activates coverage | Key dates |
|---|---|---|
| Occurrence (CG 00 01) | The bodily injury or property damage happens during the policy period - no matter when the claim is reported | Date of loss/injury |
| Claims-made (CG 00 02) | A claim is first made against the insured (and reported) during the policy period, for injury that occurred on or after the Retroactive Date | Date claim is made + Retroactive Date |
Exam key: Occurrence policies are triggered by when the injury occurred. Claims-made policies are triggered by when the claim is first made. This single distinction answers most trigger questions.
Why Claims-Made Exists
Claims-made coverage was developed for long-tail liability - exposures (asbestos, pollution, medical malpractice, professional errors) where injury surfaces years or decades after the negligent act. Under an occurrence form, an insurer that wrote a policy in 1985 could still face a claim today for a 1985 injury, making reserves nearly impossible to estimate. Claims-made forms tie the insurer's obligation to the year the claim arrives, giving more predictable reserving.
The Retroactive Date - the Backstop
The Retroactive Date is the linchpin of a claims-made policy. Coverage applies only if the injury occurred on or after that date. Any injury before the retro date is permanently excluded, even if the claim is made during the policy period.
- A retro date the same as policy inception = no prior-acts coverage (the narrowest position).
- A retro date set earlier than inception = the policy reaches back to cover prior acts ("prior acts" or "nose" coverage).
- Advancing or removing a retro date is a coverage reduction - illegal in many states without notice, because it strips coverage for past acts.
Trap: A claim made today for an injury that happened BEFORE the retro date is NOT covered - the retro date defeats it regardless of when the claim is reported.
Tail and Nose Coverage
When an insured switches insurers or retires, two gaps must be plugged.
| Coverage | Also called | What it does |
|---|---|---|
| Extended Reporting Period (ERP) | Tail coverage | Lets the insured report claims AFTER the claims-made policy ends, for injuries that occurred during the policy's active period (after the retro date) |
| Prior Acts coverage | Nose coverage | On a NEW claims-made policy, backdates the retro date so the new insurer covers acts that occurred under the old policy |
ISO claims-made forms provide a Basic (mini) tail automatically - typically 60 days to report claims made within 60 days after expiration, plus a 5-year reporting window for occurrences already reported. A Supplemental (full) tail must be purchased and is usually unlimited in time. The standard rule: ERP premium for the supplemental tail is capped at a stated multiple (often up to 200% of the expiring annual premium).
The Five-Year Maturation of Claims-Made Pricing
Claims-made premiums rise each year for roughly five years as the pool of covered prior acts grows, then the policy is considered mature. A first-year claims-made policy is cheap (it only covers acts from one year of exposure); a mature one costs nearly as much as occurrence coverage. This is why a buyer dropping claims-made for occurrence must buy tail coverage - otherwise prior-act claims reported after the switch fall into a gap.
A Worked Trigger Scenario
Dr. Chen's clinic carried a claims-made CGL with a retro date of 1/1/2020, active 2020-2024, then switched to a different insurer's occurrence policy on 1/1/2025 with no tail purchased.
- Injury in 2022, claim made in 2023: Covered - injury after retro date, claim made during the claims-made policy.
- Injury in 2019 (before retro date), claim made in 2023: NOT covered - the injury predates the 1/1/2020 retro date.
- Injury in 2022, claim first made in 2026: A GAP. The claims-made policy ended in 2024; without tail coverage the late claim is uncovered, and the 2025 occurrence policy only covers injuries that occur in 2025 or later. This is exactly why tail (ERP) coverage is essential when leaving a claims-made program.
Exam key: When a candidate switches FROM claims-made TO occurrence (or to no coverage), they need a tail. When switching TO a new claims-made policy, they need prior-acts (nose) coverage or a matching retro date.
Reading the Claims-Made Trigger Step by Step
For a claims-made CGL to respond, two conditions must both be satisfied: the injury or damage must occur on or after the retroactive date, and the claim must first be made during the policy period (or an applicable extended reporting period). If either fails, there is no coverage — which is why advancing or deleting the retroactive date at renewal can silently strip coverage for past exposures.
The extended reporting periods (ERPs) are the safety net. A Basic ERP (the automatic "mini-tail") gives a short window — typically a 60-day reporting window for claims and a 5-year window for occurrences already reported as potential claims — at no extra charge. A Supplemental ERP ("full tail") is purchased by endorsement, usually within 60 days of expiration, and extends the time to report indefinitely for occurrences before the policy ended. "Nose" coverage, by contrast, is buying a prior-acts (earlier retroactive) date from the new insurer instead of a tail from the old one.
Choosing tail versus nose when an insured switches carriers is a classic application question.
Why Insurers Use Claims-Made for Long-Tail Risks
Occurrence policies respond based on when the injury happened, even if the claim surfaces decades later (think latent disease or construction defect). That "long tail" makes losses hard to reserve and price. Claims-made policies fix the reporting year, giving insurers more predictable reserves and letting them re-price annually — which is why professional liability, D&O, and pollution coverages are usually claims-made.
The trade-off is the insured's burden to maintain continuous coverage and an unbroken retroactive date, or to buy a tail when leaving the market, so that a late-emerging claim is not orphaned between an expired claims-made policy and a new one with a later retroactive date.
An insured has a claims-made CGL with a Retroactive Date of January 1, 2021, in force through December 31, 2024. A bodily injury occurred on June 1, 2020, but the claimant did not file suit until March 2024. Is the claim covered?
A business is replacing its claims-made CGL with an occurrence CGL from a new insurer and is buying no other coverage. To avoid a coverage gap for past acts that may be reported after the switch, what should the business purchase?