8.3 Occurrence vs. Claims-Made Triggers
Key Takeaways
- An occurrence policy is triggered by when the injury occurs; a claims-made policy by when the claim is first made.
- The retroactive date is the earliest injury date that can be covered on a claims-made form — earlier injuries are excluded.
- The Basic ERP is automatic (60-day plus 5-year mini-tail); the Supplemental ERP must be requested in writing and purchased.
- Claims-made forms exist for long-tail exposures (malpractice, pollution, products) and mature in premium over about five years.
- When switching claims-made carriers, buy tail coverage or obtain prior-acts (nose) coverage to avoid a gap.
What a Coverage Trigger Is
A coverage trigger is the event that determines which policy responds to a loss. In liability insurance the trigger matters enormously because the harm (the injury) and the claim (the lawsuit) can be years apart — think asbestos, mold, or a slow-leaking pollutant. ISO writes the CGL (CG 00 01) in two forms, and the only difference is the trigger.
Occurrence Trigger
An occurrence policy covers injury or damage that occurs during the policy period, regardless of when the claim is filed. If the bodily injury happens in 2026, the 2026 occurrence policy responds even if suit is filed in 2031.
Claims-Made Trigger
A claims-made policy covers claims first made against the insured during the policy period (or extended reporting period), provided the injury occurred on or after the retroactive date. The filing of the claim triggers coverage — not the date of injury.
| Feature | Occurrence | Claims-Made |
|---|---|---|
| Trigger | When injury occurs | When claim is first made |
| Long-tail exposure | Insurer keeps liability for years | Liability tied to active policy |
| Key date | Policy period of injury | Retroactive date + report date |
Claims-Made Critical Dates
Claims-made forms layer on two date concepts the exam loves to test.
Retroactive Date
The retroactive (retro) date is the earliest date an injury can have occurred and still be covered. An occurrence before the retro date is never covered, no matter when the claim is filed. A claims-made policy with a retro date of 1/1/2024 will not cover an injury that happened 12/31/2023.
Extended Reporting Periods (Tail Coverage)
When a claims-made policy is canceled or not renewed, claims reported after expiration would otherwise fall through a gap. Extended Reporting Periods (ERPs), or "tail coverage," close that gap.
- Basic ERP (automatic): ISO CGL provides a short tail automatically — a 60-day window to report claims, plus a 5-year window (the "mini-tail") for occurrences known and reported during the policy that mature into claims.
- Supplemental ERP (must be purchased): An unlimited reporting tail bought by endorsement, typically for an extra premium up to a set percentage of the expiring annual premium.
Trap: The Basic ERP is automatic and free; the Supplemental ERP must be requested in writing (usually within 60 days of termination) and paid for.
Why Claims-Made Exists and How to Choose
Claims-made forms emerged for long-tail exposures — professional liability, medical malpractice, pollution, products — where injuries surface years after the act. Pricing an occurrence policy for those risks is hard because the insurer stays on the hook indefinitely. Claims-made lets insurers reserve more accurately.
Year-by-Year Maturity
A new claims-made program usually starts with the retro date equal to the inception date (a "first-year" or "immature" policy) and the premium climbs each renewal as the gap between retro date and the current period widens — the policy "matures," usually leveling off around year five.
Switching Carriers — Mind the Gap
When moving from claims-made Carrier A to Carrier B:
- Buy a tail (supplemental ERP) from Carrier A, or
- Have Carrier B grant prior-acts (nose) coverage by setting B's retro date back to A's.
Failing to do one or the other leaves a coverage gap for injuries that occurred under A but are reported during B's term.
- Occurrence = pick the policy by date of injury
- Claims-made = pick the policy by date claim is made, and verify the retro date
The Two Triggers and Their Critical Dates
An occurrence trigger covers injury or damage that happens during the policy period, no matter when the claim is reported — even years later. A claims-made trigger covers a claim first made during the policy period (and after the retroactive date), regardless of when the injury occurred. The retroactive date is the earliest loss date the policy will cover; injuries before it are excluded forever. Claims-made forms exist to solve the long-tail problem (asbestos, professional liability) where damage surfaces decades after the negligent act.
Extended Reporting Periods (Tail Coverage)
When a claims-made policy ends, claims reported afterward could fall into a gap. Extended Reporting Periods (ERPs) fix this. A Basic (mini) tail is automatic and free, giving a short window (often 60 days for claims made after expiration, plus a 5-year window for occurrences reported during the policy that mature into claims).
A Supplemental (full) tail is purchased for additional premium and can extend reporting indefinitely for occurrences before the policy ended. The retroactive date does not advance under a tail. Exam scenario: switching carriers, always either buy a tail from the old insurer or obtain prior-acts (nose) coverage from the new one — never leave a gap.
The Year-by-Year Maturity of a Claims-Made Program
Claims-made coverage matures over time. In year one the retroactive date equals the inception date, so only claims for acts after inception are covered (cheapest premium).
Each renewal keeps the same retroactive date while the reporting window grows, so a mature claims-made policy (typically year five) covers a long span of prior acts and costs nearly as much as occurrence coverage. The danger is a gap on switching: if a new carrier sets a later retroactive date, prior acts fall through. The fix is prior-acts (nose) coverage from the new insurer or a supplemental ERP (tail) from the old one — never both, never neither.
An injury occurs in March 2026 but the lawsuit is not filed until 2030. The insured carried an occurrence-form CGL in 2026 and a different occurrence-form CGL in 2030. Which policy responds?
A claims-made CGL has a retroactive date of 1/1/2025. An injury occurred on 11/1/2024 but the claim is first made against the insured on 6/1/2026, during the policy period. Is the claim covered?