11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates

Two Coverage Triggers, Two ISO Forms

The Commercial General Liability (CGL) is sold on two trigger formats. The occurrence form is Insurance Services Office (ISO) form CG 00 01; the claims-made form is CG 00 02. The trigger is the event that activates coverage.

A common exam trap: the occurrence policy in force when the injury happened responds — not the policy in force when the lawsuit is filed.

Occurrence Trigger in Practice

Under the occurrence form, coverage attaches to the date of injury or damage, even if the claim surfaces years later. This matters for long-tail exposures such as construction defects or latent injury.

Worked example: A contractor carries a 2024 occurrence CGL. A customer is injured by faulty work in November 2024 but does not sue until 2027. The 2024 occurrence policy responds because the injury occurred in 2024 — even though that policy expired and three later policies have come and gone. The insured never needs separate tail coverage because the occurrence form covers the event whenever the claim arrives.

Retroactive Date on the Claims-Made Form

The retroactive date (retro date) is unique to claims-made coverage. It is the earliest date of injury the policy will cover. For a claim to be paid, two conditions must both be met:

1. the injury occurred on or after the retro date, and
2. the claim is first made during the policy period (or an Extended Reporting Period).

Worked example: A 2024 claims-made policy carries a retro date of 2020.

Exam trap: Advancing or eliminating the retro date narrows coverage and can leave prior acts uninsured; producers should preserve the retro date when an insured switches carriers.

Extended Reporting Periods (Tail Coverage)

Because claims-made coverage ends when the policy ends, Extended Reporting Periods (ERPs) let the insured report covered claims after expiration.

• Basic ERP (the "mini-tail"): automatic and free. It allows reporting of claims for 60 days after expiration, plus a 5-year window for occurrences already reported during the policy term.
• Supplemental ERP (the "full tail"): purchased by endorsement for an added premium. It provides an unlimited reporting period and must be requested, typically within 60 days of cancellation or non-renewal.

An ERP does not extend the injury period or change the retro date — it only extends the time to report a claim. The premium for a claims-made policy starts low and steps up each year until the form matures around the fifth year, when its cost roughly equals an occurrence form.

Laser Beam vs. Sunrise: Reading Claims-Made Triggers

A helpful mental model treats the retroactive date as a wall and the policy period as a window. For coverage, the injury must occur after the wall (on or after the retro date) and the claim must be reported through the window (during the policy period or an Extended Reporting Period).

Claims-made policies come in two flavors tested on the exam:

• Pure claims-made: coverage depends only on the claim being made during the policy period; the injury date is governed by the retro date.
• Claims-made-and-reported: stricter; the claim must be both made and reported to the insurer during the policy period (or ERP).

Producer duty: When an insured moves from one claims-made carrier to another, the agent should keep the original retro date or arrange prior-acts coverage. Letting the retro date advance to the new policy's inception creates a coverage gap for older, not-yet-reported injuries — a classic errors-and-omissions exposure.

Cost, Maturity, and When to Choose Each Form

Claims-made forms are priced low in year one because only first-year claims are possible, then step up for roughly five years as additional layers of prior exposure attach. By the fifth year the form is "mature" and costs about the same as an occurrence form covering the same risk.

Exam trap: Buying an ERP does not raise the limits or reset the aggregate; it only buys time to report claims tied to injuries that already fell within the original coverage period and retro date.