11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates
Key Takeaways
- Occurrence (CG 00 01) is triggered when the injury OCCURS during the period regardless of when the claim is filed; claims-made (CG 00 02) is triggered when the CLAIM is first made.
- The retroactive date is the back edge of claims-made coverage; injuries before it are never covered even if the claim is made in-period.
- Occurrence policies have built-in tail coverage; claims-made policies need an Extended Reporting Period to cover late-reported or post-expiration-reported claims.
- Basic ERP is automatic and free (60 days plus 5 years for in-period occurrences); Supplemental ERP is purchased within 60 days for unlimited reporting time.
- Claims-made premiums step up annually until the policy matures around year five; an ERP extends the reporting window only, never the injury-coverage window.
The Two Coverage Triggers
The CGL is written on one of two forms, distinguished entirely by the coverage trigger - the event that obligates the insurer to respond.
| Factor | Occurrence (CG 00 01) | Claims-Made (CG 00 02) |
|---|---|---|
| Trigger | Injury or damage occurs during the policy period | A claim is first made during the policy period |
| When claim is filed | Irrelevant - may be filed years later | Must be made during the period or an ERP |
| Retroactive date | None | Limits how far back coverage reaches |
| Tail coverage | Built in automatically | Must purchase an Extended Reporting Period |
| Premium pattern | Stable from year one | Starts low, 'steps up' until mature (~year 5) |
Occurrence is by far the more common CGL form. It responds whenever the bodily injury or property damage takes place during the policy period, no matter how many years later the claim is filed. This built-in 'long tail' is why occurrence policies need no separate tail coverage.
How the Occurrence Trigger Works
Under an occurrence policy, you 'lock in' the coverage of the policy that was in force when the injury happened.
Worked example: A customer slips in a store in December 2024, but the injury worsens and they do not sue until 2027. The store has switched insurers twice since then. Which policy responds? The 2024 occurrence policy - because the occurrence (injury) took place during the 2024 period. The current 2027 insurer is not involved at all.
This is why occurrence policies are preferred for long-tail exposures like construction defects, where damage may not surface for years. The downside for insurers is 'incurred but not reported' (IBNR) loss uncertainty - they may be paying claims a decade after writing the premium.
The Retroactive Date - The Heart of Claims-Made
A claims-made policy responds when a claim is first made against the insured during the policy period, but ONLY if the injury occurred on or after the retroactive date shown on the Declarations. The retro date is the earliest injury date the policy will cover.
Think of claims-made coverage as a window bounded by two dates:
- Back edge: the retroactive date - injuries before it are never covered.
- Front edge: the policy expiration (extended by any ERP) - claims made after it are not covered unless a tail applies.
Worked example: A 2024 claims-made policy has a retroactive date of January 1, 2020.
- A claim filed in 2024 for a 2021 injury: COVERED (injury after retro date, claim made in-period).
- A claim filed in 2024 for a 2019 injury: NOT COVERED (injury predates the retro date).
- A claim filed in 2025 (after expiration) for a 2023 injury: NOT COVERED unless an Extended Reporting Period was purchased.
A claims-made CGL is effective for calendar year 2025 with a retroactive date of January 1, 2022. In 2025 the insured is sued for bodily injury that occurred in 2021. How does the policy respond?
Extended Reporting Periods (Tail Coverage)
Because a claims-made policy only responds to claims made during the period, an insured who switches to occurrence coverage or non-renews could be left with a gap. The Extended Reporting Period (ERP), or 'tail,' closes it.
- Basic ERP (Mini-Tail): automatic and free. It allows claims to be reported for 60 days after the policy ends for any occurrence, plus 5 years for occurrences that were reported to the insurer (via the 60-day notice) during the policy period. No injury after the policy ends is covered - only late-reported claims for in-period injuries.
- Supplemental ERP (Full Tail): purchased by endorsement for an additional premium, it provides an unlimited reporting period. The insured must request it in writing within 60 days of cancellation or non-renewal.
Critical: an ERP extends the reporting window only. It never advances the retroactive date or covers injuries that occur after the policy expires.
Step-Up Premiums and Maturity
Claims-made premiums step up annually as the policy 'matures.' In year one, the retro date and effective date are the same, so the insurer is exposed to only one year of injury history - the premium is low (a 'first-year' or 'immature' rate). Each renewal, the retro date stays fixed while another year of potential injury history accumulates, so the premium rises until the policy is mature (typically around the fifth year).
Exam trap: students assume claims-made is always cheaper. It is cheaper early but converges toward occurrence pricing at maturity, and the insured must still budget for an expensive full tail if they ever leave. The combination of step-up premiums plus tail cost is why many insureds prefer occurrence forms despite the higher initial premium.
Which statement about the Basic Extended Reporting Period (mini-tail) on a claims-made CGL is correct?
Occurrence vs. Claims-Made CGL Side by Side
The CGL is available as an occurrence form (covering injury that occurs during the policy period, no matter when the claim is made) and a claims-made form (covering claims first made during the policy period for injury occurring on or after the retroactive date). The occurrence form is preferred for most general liability because injuries are usually evident soon after the event. The claims-made form is used where injuries may surface years later. The exam tests the trigger by asking which policy year responds when the injury and the claim fall in different years.
The Retroactive Date and the Coverage Gap
On a claims-made CGL, the retroactive date excludes injury occurring before it, even if the claim is made during the policy period. Maintaining the original retroactive date across renewals and carrier changes is essential; advancing the date creates a gap for prior acts. When an insured switches from one claims-made insurer to another, the new policy should carry the same retroactive date, or the insured should buy tail coverage from the old insurer, to avoid an uncovered window. A scenario with a later retroactive date on a new policy is signaling exactly this gap.
Extended Reporting Periods on the CGL
Claims-made CGL forms provide a Basic Extended Reporting Period automatically: a short window (commonly 60 days) to report any claim made after expiration, plus a longer window (commonly five years) for claims arising from occurrences reported to the insurer during the policy period. A Supplemental Extended Reporting Period, purchased by endorsement within a stated time after expiration, provides an unlimited reporting window for claims arising from pre-expiration occurrences after the retroactive date. Tail coverage protects an insured that lets a claims-made policy lapse without replacing it on the same retroactive date.
Why a Business Chooses One Trigger
A business with short-tail exposures (a retailer whose slip-and-fall injuries appear immediately) is well served by an occurrence form, which closes the policy year cleanly. A business with long-tail exposures (a manufacturer or contractor whose work may cause harm years later, or a firm facing latent pollution or product claims) may be placed on claims-made, which lets the insurer measure exposure by claims reported rather than open-ended occurrence liability.
Recognizing that the choice of trigger tracks how quickly the insured's typical injuries manifest, and that switching triggers requires attention to the retroactive date and tail coverage, is the practical understanding the exam rewards.