8.3 Occurrence vs. Claims-Made Triggers
Key Takeaways
- An occurrence policy covers injury that HAPPENS during the policy term, no matter when the claim is reported; a claims-made policy covers claims first MADE during the term.
- Claims-made policies use a RETROACTIVE DATE — events before it are never covered — and an Extended Reporting Period (tail) for late-reported claims.
- Occurrence coverage is common in personal lines and CGL; claims-made dominates professional liability (E&O, D&O, malpractice) where long-tail claims are common.
- The CGL is offered in BOTH occurrence (CG 00 01) and claims-made (CG 00 02) versions; matching the trigger to the exposure prevents coverage gaps.
- Basic and Supplemental ERPs differ — a 60-day basic tail is automatic and free; a Supplemental ERP must be purchased, often within 60 days of expiration.
Why Triggers Matter
Liability claims often surface years after the harmful act — a contractor's faulty work fails in year five; a drug's side effects appear a decade later. The coverage trigger decides which policy year must respond.
| Trigger | Coverage applies when... | Common in |
|---|---|---|
| Occurrence | the injury or damage HAPPENS during the term | Personal lines, CGL (CG 00 01) |
| Claims-made | the CLAIM is first MADE during the term | E&O, D&O, malpractice (CG 00 02) |
Under an occurrence policy, the year the injury occurs is the year that responds — even if the claim arrives ten years later. Under a claims-made policy, the year the claim is reported responds — provided the event happened on or after the retroactive date.
The Retroactive Date and the Tail
Claims-made policies have two defining features the exam tests heavily.
Retroactive Date
The retroactive date is the earliest date for which a claim will be covered. An injury that occurs before the retro date is never covered, no matter when the claim is made. Advancing (moving up) the retro date creates a gap; keeping it stable preserves prior coverage.
Extended Reporting Period (ERP / "Tail")
Because claims-made coverage ends when the policy ends, a tail extends the time to REPORT claims for events that occurred during the policy period:
- Basic ERP (mini-tail): automatic, usually 60 days to report a claim after expiration, plus up to 5 years for occurrences noticed near the end — provided at no charge.
- Supplemental ERP (full tail): must be purchased, often within 60 days of expiration; can extend reporting indefinitely.
Trap: A retro date matters only on claims-made forms. Occurrence forms have no retro date and no tail because the year of injury fixes coverage permanently.
Worked Trigger Scenarios
Assume an insured had an occurrence CGL in 2022 and switched to a claims-made CGL (retro date 1/1/2023) in 2023. An injury caused by the insured's product happens in 2022 but the claim is filed in 2024.
- Occurrence 2022 policy responds — it covers injury that HAPPENED in 2022, regardless of when the claim arrives.
- The 2023 claims-made policy does NOT respond — the injury predates its 1/1/2023 retro date, so it is excluded even though the claim was made during its term.
Now flip it: injury occurs in 2023 (after the retro date) but the claim is filed in 2025 after the claims-made policy lapsed with no tail. No coverage — the claim was made after expiration and no ERP was purchased. This is exactly why a departing professional buys a tail.
A consultant's claims-made E&O policy has a retroactive date of 6/1/2024 and expires 5/31/2025 with no tail purchased. A client files a malpractice claim on 7/15/2025 for advice given in October 2024. Is there coverage?
Matching the Trigger to the Exposure
The ISO CGL is published in two forms: CG 00 01 (occurrence) and CG 00 02 (claims-made). Choosing the right trigger avoids gaps and overlaps.
- Occurrence is preferred for long-tail bodily injury and property damage because the policy year is locked in at the time of injury — ideal for contractors and manufacturers whose work may fail years later.
- Claims-made lets insurers price more accurately for professions where claims emerge slowly and severity is hard to predict (physicians, lawyers, accountants, directors and officers).
When an insured moves between insurers or between trigger types, agents must coordinate the retro date and tail/prior-acts coverage so that no period of exposure is left uncovered. A common error tested on the exam: switching from claims-made to occurrence without a tail, leaving prior-period claims orphaned.
Claims-Made Maturity Steps and Pricing
Claims-made coverage typically matures over the first five years. Each renewal, the gap between the retro date and the policy term widens, so more prior years of exposure are covered and the premium rises toward the mature (5th-year) rate.
| Year | Retro-date gap covered | Relative premium |
|---|---|---|
| Year 1 (1st-year) | Current year only | Lowest |
| Year 2-4 | Growing prior period | Increasing |
| Year 5+ (mature) | Full prior-acts window | Highest / stable |
This maturity curve is why claims-made is cheaper than occurrence in early years but converges over time. It also explains the value of nose coverage (prior-acts coverage from a new insurer that picks up the old retro date) versus a tail from the expiring insurer.
Trap: "Nose" coverage is bought from the NEW insurer to cover prior acts; a "tail" (ERP) is bought from the OLD insurer to extend reporting. Exam questions swap these to test you.
Reporting Triggers and Laser Provisions
Not all claims-made forms are identical. Two refinements appear on the exam.
- Claims-made-and-reported: the strictest version — the claim must be both made AND reported during the policy term (or ERP). A claim made on the last day but reported a week later may fall outside coverage absent a tail. Pure claims-made forms are slightly more lenient.
- Notice of a potential claim: most forms let the insured report circumstances likely to give rise to a claim during the term; a claim later arising from those circumstances is then treated as made during that term, protecting the insured even after the policy expires.
Insurers may also use a "laser" — an endorsement excluding a specific known claimant or matter from the retro-active coverage when an insured switches carriers.
Exam point: On a claims-made-AND-reported form, late reporting can defeat an otherwise-timely claim. The phrase "and reported" is the tell — read it carefully.