11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates

Two Coverage Triggers, Two Forms

ISO publishes the CGL in two trigger versions: the Occurrence form (CG 00 01) and the Claims-Made form (CG 00 02). The trigger determines which policy responds to a loss, and it is one of the highest-yield national topics because the rules govern tail liability, retroactive dates, and extended reporting periods (ERPs). Get the definitions exact - the exam rewards precision here.

Occurrence Trigger

Under the occurrence form, coverage is triggered when the bodily injury or property damage occurs during the policy period, regardless of when the claim is reported. A 2024 occurrence-policy injury reported in 2030 is still covered by the 2024 policy. This is ideal for long-tail exposures (construction, products) where harm surfaces years later. The drawback for insurers is the long 'tail' of unknown future claims.

Claims-Made Trigger

Under the claims-made form, two things must line up: the injury must occur on or after the Retroactive Date, and the claim must first be made during the policy period (or during an ERP). It does not matter when the injury happened, only that the claim is presented while the policy is in force. Claims-made is common in professional and pollution lines and lets insurers reserve more accurately.

The Retroactive Date

The Retroactive Date is the cutoff: injury or damage that occurs before it is never covered, no matter when the claim is made. When an insured first buys a claims-made policy, the retro date is usually set to the policy inception ('full prior acts' would set it earlier or leave it blank). Advancing or 'cutting back' the retroactive date silently strips coverage for prior exposures - a major exam trap and an unfair-trade-practice concern if done without disclosure.

Worked Example: Which Policy Pays?

Injury occurs March 2025. Insured had an occurrence CGL in 2025 and a claims-made CGL (retro date 1/1/2024) in 2026. The claim is first reported June 2026.

• Occurrence form (2025): triggered, because the injury occurred in 2025 - covered.
• Claims-made form (2026): injury (3/2025) is after the 1/1/2024 retro date AND claim first made in 2026 - also triggered.

If the retro date on the 2026 policy were instead 1/1/2026, the March 2025 injury falls before retro - no coverage under the claims-made policy.

Extended Reporting Periods (Tail Coverage)

When a claims-made policy is cancelled or non-renewed, claims reported after expiration would otherwise fall into a gap. ISO provides:

• Basic (Automatic) ERP: built in at no charge; gives a short 60-day window to report any claim, plus a 5-year window for claims from occurrences already reported to the insurer as incidents during the policy term (the 'mini-tail').
• Supplemental ERP: must be purchased by written request, usually within 60 days of termination; provides an unlimited reporting period for covered prior occurrences at an additional premium.

The Five-Step Claims-Made Maturity

Claims-made premiums rise over the first several years as the exposure 'matures.' A first-year (year 1) claims-made policy is the cheapest because it only covers injuries between the retro date and that single year; by year 5+ the policy is considered mature and is priced like a steady-state occurrence policy. Switching from claims-made back to occurrence creates a potential gap that tail (ERP) coverage is designed to fill.

Tail Coverage, Retro Dates, and the Maturity Curve

A claims-made CGL (CG 00 02) needs the claim reported during the period, so it offers Extended Reporting Periods (ERPs) to protect the insured afterward:

The maturity curve: In year 1 a claims-made policy covers only occurrences after the retro date reported that year, so its premium is far below an occurrence policy's. With each renewal the covered band of prior occurrence-years widens, stepping the premium up through roughly year 5, when the policy matures and its price approaches a comparable occurrence form. The retroactive date is the floor — injury before it is never covered — and it must not advance at renewal or a gap opens. When switching carriers, either carry the old retro date forward or buy a supplemental ERP (tail) on the expiring policy; moving from claims-made to occurrence almost always requires that tail.

Working a Multi-Year Trigger Problem

Trigger questions usually layer several policy years; solve them with the fixed routine. For an occurrence form ask only: did the injury occur during the term? For a claims-made form ask both: was the claim first made during the term (or ERP)? and did the injury occur on or after the retro date?

Worked example: An insured carried occurrence CGLs in 2021-2022, then a claims-made CGL with a 2023 retro date for 2023-2026. A customer is injured by the insured's product in 2022 but does not sue until 2025.

• The 2022 occurrence policy responds, because the injury occurred during its term; the late 2025 claim does not matter to an occurrence form.
• The claims-made policy does not respond, because the 2022 injury predates its 2023 retro date, even though the claim arrived during the claims-made term.

Why it matters: This is the exact gap candidates miss when an insured switches from occurrence to claims-made without preserving the earlier years. The clean fixes are to set the new claims-made retro date back to the start of continuous coverage, or to rely on the expired occurrence policies (which already locked in their years). Going the other direction — claims-made to occurrence — requires buying a supplemental ERP (tail) on the expiring claims-made policy so late-reported old injuries still have a home.