11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates
Key Takeaways
- The occurrence CGL (ISO CG 00 01) covers injury or damage that takes place during the policy period no matter when the claim is reported, providing built-in long-tail protection.
- The claims-made CGL (ISO CG 00 02) covers a claim only if it is first made during the policy period or an applicable Extended Reporting Period.
- On a claims-made policy the retroactive date sets the earliest injury date that can be covered; injury before the retro date is excluded.
- A claims-made trigger requires both that injury occur on or after the retro date and that the claim be reported during the policy or extended reporting period.
- Basic ERP tail is automatic and short (often 60 days plus a 5-year mini-tail), while a Supplemental ERP must be purchased and provides unlimited reporting time.
Two Coverage Triggers
The CGL is written on one of two triggers. The occurrence form, ISO CG 00 01, responds when bodily injury or property damage takes place during the policy period, no matter how many years later the claim is filed. The claims-made form, ISO CG 00 02, responds only when the claim is first made against the insured during the policy period (or an applicable reporting extension).
| Feature | Occurrence (CG 00 01) | Claims-Made (CG 00 02) |
|---|---|---|
| Trigger | Date injury/damage occurs | Date claim is first made |
| Retroactive date | Not used | Required |
| Long-tail protection | Built in automatically | Needs an Extended Reporting Period |
| Typical use | Most general liability risks | Latent or long-tail exposures |
The Retroactive Date
A claims-made policy carries a retroactive date - the earliest date on which covered injury or damage can take place. Anything before the retro date is excluded even if the claim is reported during the policy period.
Worked example: A policy has a retroactive date of January 1, 2024, and a policy period of 2026. A customer is injured by exposure that began in 2023, but the lawsuit is first filed in 2026. Because the injury predates the retro date, the claim is not covered, even though it was reported during the active policy. The retro date, not the report date, defeats coverage here.
The Dual Trigger of Claims-Made
Claims-made coverage applies only when both conditions are met:
- The injury or damage occurs on or after the retroactive date, and
- The claim is first made during the policy period (or an Extended Reporting Period).
If either leg fails, there is no coverage. This dual requirement is why claims-made insureds must avoid coverage gaps: dropping coverage or advancing the retro date can leave prior acts unprotected. Occurrence coverage has no such complexity because the single trigger is simply the date injury took place.
Extended Reporting Periods (Tail Coverage)
When a claims-made policy is canceled or not renewed, the Extended Reporting Period (ERP), or tail, lets claims be reported after expiration for injury that occurred during the covered period.
| ERP type | How obtained | Length |
|---|---|---|
| Basic ERP | Automatic, no charge | Short-tail (often 60 days) plus a 5-year mini-tail for claims reported within that window |
| Supplemental ERP | Must be purchased, requested within 60 days | Unlimited reporting time |
The Basic tail covers claims reported shortly after expiration, while the Supplemental tail removes the reporting deadline entirely. A business switching insurers should buy a Supplemental ERP or have the new policy use the same retroactive date to avoid a gap.
Common Exam Traps
- Report date vs. injury date: On occurrence forms the injury date triggers coverage; on claims-made forms the report date triggers it. Expect questions that test which date controls.
- Advancing the retro date: Moving the retro date forward at renewal silently strips coverage for prior acts; the correct answer is that earlier injuries become uninsured.
- Tail vs. prior acts: A tail (ERP) extends the reporting window backward into the past period; a prior acts (nose) provision on a new policy covers acts before its inception. Do not confuse the two directions.
- Occurrence has no ERP: Because occurrence coverage is permanent for injury during the period, there is no need for tail coverage, and questions offering an occurrence ERP are usually wrong.
A claims-made CGL has a retroactive date of June 1, 2025, and a policy period of all of 2026. A claim is first reported in March 2026 for property damage that occurred in February 2025. Is the claim covered?
A business is replacing its claims-made CGL with a new insurer and wants to avoid any gap for past acts. Which option best protects it?
The Five Claims-Made Coverage Scenarios
Claims-made insurers describe coverage using a year-by-year framework that the exam loves to test. Imagine a policy with a retroactive date of January 1, 2024, renewed annually through 2026.
| Scenario | Injury date | Claim reported | Covered? |
|---|---|---|---|
| 1 | Before retro date (2023) | During policy (2026) | No - injury predates retro date |
| 2 | After retro (2024) | During policy (2026) | Yes - both legs met |
| 3 | After retro (2025) | After expiration, no ERP | No - reported too late |
| 4 | After retro (2025) | During Supplemental ERP | Yes - ERP extends reporting |
| 5 | After retro (2024) | During later renewal (2026) | Yes - claim made while covered |
Work each row by checking the two triggers independently: was the injury on or after the retro date, and was the claim first made during a covered reporting window?
Why Claims-Made Forms Exist
Occurrence forms expose the insurer to long-tail liability: a policy written in 2026 might still pay a claim filed in 2040 for 2026 injury. For exposures like products, professional services, and environmental risk, the years between injury and claim make pricing difficult. Claims-made coverage lets the insurer set reserves based on claims actually reported during the period, which stabilizes pricing for these hard-to-predict risks.
The trade-off is that the insured must manage the retroactive date and reporting windows carefully. A lapse, a forward-moved retro date, or a switch to a new insurer without a matching retro date can create a coverage gap that an occurrence form would never produce.
Premium Step Factors and Maturity
A claims-made policy starts cheaper than an occurrence policy because, in its first year, only same-year reporting is possible. Each renewal increases the step factor as more prior years become reportable, until the policy reaches mature pricing (typically year five), where its cost approaches that of an occurrence form.
Worked example: A first-year claims-made CGL might cost about 40 percent of the mature premium, a second-year policy about 65 percent, and so on, reaching roughly 100 percent at maturity. Candidates should know that the low first-year premium is not a discount - it reflects the narrower window of claims that can be reported, and the price rises predictably as the retro period lengthens.