8.3 Occurrence vs. Claims-Made Triggers
Key Takeaways
- An occurrence form (CG 00 01) is triggered by the date the injury or damage occurs, no matter when the claim is filed.
- A claims-made form (CG 00 02) is triggered when the claim is first made, and only if the injury occurred on or after the retroactive date.
- Injury before the retroactive date is never covered under a claims-made policy.
- Extended reporting periods (basic automatic mini-tail and purchased supplemental tail) extend time to REPORT claims, preventing gaps when a claims-made policy ends.
The Coverage Trigger Problem
A coverage trigger is the event that determines which policy responds to a loss. For property this is easy — the policy in force when the fire happens pays. For liability it is harder, because the injury, the discovery, and the lawsuit can occur years apart (think slow-developing pollution or product injury). ISO writes the CGL in two trigger versions: Occurrence (CG 00 01) and Claims-Made (CG 00 02). Knowing which one responds is among the most-tested CGL concepts.
Occurrence Trigger (CG 00 01)
An occurrence policy responds if the bodily injury or property damage takes place during the policy period, regardless of when the claim is filed. A claim brought 10 years later still falls on the policy that was in force when the injury occurred.
- Advantage: broad, long-tail protection; no gap when you switch carriers.
- Disadvantage: insurer faces unknown future ('IBNR' — incurred but not reported) liabilities for years; pricing is harder.
The CGL defines "occurrence" as an accident, including continuous or repeated exposure to substantially the same general harmful conditions. The key phrase: it is the date of injury, not the date of claim, that triggers an occurrence form.
Claims-Made Trigger (CG 00 02) and Its Dates
A claims-made policy responds only if the claim is first made against the insured during the policy period (or extended reporting period), and the injury occurred on or after the retroactive date.
Three dates control:
- Retroactive date — the earliest injury date the policy will cover. Injury before this date is never covered. Trap: advancing or losing the retro date creates a coverage gap.
- Policy period — the claim must first be made during this window.
- Extended Reporting Period (ERP / "tail") — extends the time to report claims after the policy ends:
- Basic / Mini-tail: automatic, short (60 days to report; 5 years for occurrences known late).
- Supplemental tail: purchased, unlimited time to report, for an extra premium.
Side-by-Side and the Classic Exam Trap
| Feature | Occurrence (CG 00 01) | Claims-Made (CG 00 02) |
|---|---|---|
| Trigger | Injury during policy period | Claim first made during policy period |
| Retroactive date | None | Yes — injury must be on/after it |
| Tail / ERP | Not needed | Basic + Supplemental available |
| Cost / long-tail | Higher early; broad | Lower early; needs tail to match |
Worked scenario: A product injures a consumer in 2023 (injury). The claim is filed in 2026. (a) Under an occurrence policy in force in 2023, the 2023 policy pays. (b) Under a claims-made policy in force in 2026 with a retro date of 2020, the 2026 policy pays because the claim was first made in 2026 and the injury post-dates the retro date.
Trap: Switching from claims-made to occurrence (or letting the policy lapse) without buying a tail leaves claims that are reported later uncovered.
A defective product injures a consumer in 2023. The lawsuit is filed in 2026. The manufacturer's CGL is written on an OCCURRENCE form. Which policy responds?
Under a claims-made CGL, an injury that occurred BEFORE the policy's retroactive date is:
The Retroactive Date and Prior-Acts Coverage
A claims-made policy responds only if the wrongful act happened on or after the retroactive date and the claim is first made during the policy period (or an extended reporting period). The retroactive date is the single most-tested feature: acts before it are never covered, no matter when the claim arrives. When an insured switches carriers, negotiating full prior-acts (a retro date matching the original first claims-made policy) prevents a coverage gap. A retro date advanced to the new policy's inception strips coverage for all earlier work — a serious E&O pitfall for agents.
Extended Reporting Periods (Tail Coverage)
When a claims-made policy ends and is not replaced with matching prior-acts coverage, claims for past acts could fall into a gap. Extended reporting periods (ERPs) close it. A basic (mini) tail is automatic and short (often 30–60 days for reporting, plus a longer window for acts known and reported). A supplemental (full) tail is purchased for an extra premium and can run years or be unlimited, letting claims first made after expiration still attach to the expired policy. ERPs do not extend the acts covered — only the time to report claims arising from acts before expiration.
Step-Rating and the Maturity Curve
Claims-made premiums are step-rated: a first-year (immature) policy is cheap because few past acts can yet generate claims; premiums rise each year as the coverage period lengthens until the policy is mature (typically year five), when it is priced comparably to occurrence coverage. The exam tests why a first-year claims-made policy costs less than occurrence — fewer covered acts in the window — and why switching mid-curve requires either a new retro date with tail or a matching prior-acts date on the new policy.
The Classic Long-Tail Exam Trap
Long-tail exposures — products, pollution, professional errors — separate the act from the claim by years. An occurrence form responds based on when the injury happened, so a product made in 2024 that injures someone in 2030 is covered by the 2024 policy even though it expired long ago. A claims-made form responds based on when the claim is first made, subject to the retroactive date. Confusing which date controls is the single most common error on trigger questions; underline 'when the injury occurred' vs. 'when the claim was made' before answering.