8.3 Occurrence vs. Claims-Made Triggers

Two Coverage Triggers

Liability policies decide which year pays a claim using a coverage trigger:

• Occurrence trigger - coverage applies if the bodily injury or property damage happened during the policy period, no matter when the claim is reported (even years later).
• Claims-made trigger - coverage applies if the claim is first made against the insured during the policy period (or during an extended reporting period), and the injury happened on or after the retroactive date.

The ISO CGL is sold in both versions: CG 00 01 (occurrence) and CG 00 02 (claims-made).

The Retroactive Date and Extended Reporting Periods

A claims-made policy has a retroactive date - the earliest date on which a covered injury can occur. Injury before the retroactive date is never covered, even if the claim arrives during the policy period.

When a claims-made policy ends or its retro date advances, an Extended Reporting Period (ERP), or tail coverage, lets the insured report later claims for past injury:

• Basic (mini) tail - automatic; a short window (commonly 60 days) plus a 5-year window for claims from incidents reported as occurrences during the policy.
• Supplemental (full) tail - purchased; unlimited time to report, but injury must still post-date the retro date.

Timeline Scenario

Assume a claims-made CGL with a retroactive date of 1/1/2024 and a policy period of 1/1/2026 to 1/1/2027.

With an occurrence form, the 6/1/2026 injury is covered no matter when the claim is reported, because the form keys on the injury date alone.

This is why stacking can occur on occurrence forms: a claim from a 2026 injury reported in 2032 reaches back to the 2026 policy's limits, even after several renewals.

The single sentence that answers most trigger questions

Memorize this: an occurrence form keys on when the injury happened; a claims-made form keys on when the claim is first made, and only if the injury occurred on or after the retroactive date. Run any date pair through that test. Injury 6/1/2026, claim 4/1/2027, occurrence form: covered (injury in a covered year). Same dates, claims-made expiring 1/1/2027: not covered without a tail. Injury 3/1/2023 with a 1/1/2024 retro date: never covered, because injury predates the retroactive date regardless of when the claim arrives.

Avoiding the coverage gap when switching carriers

The practical, tested pitfall is the gap created by changing claims-made insurers. The new policy must carry the same or earlier retroactive date; if the new carrier assigns a later retro date, every injury between the old retro date and the new one becomes uninsured. The alternatives are buying prior-acts (nose) coverage from the new insurer or a supplemental extended reporting period (tail) from the old one - and the supplemental tail must usually be requested within 60 days of cancellation or nonrenewal or the right is lost. Occurrence forms avoid this entirely, which is why short-tail lines prefer them.

Maturity, pricing, and the long tail

A last distinction the exam draws: claims-made pricing starts low and matures over about five years as the pool of reportable past injuries grows, while occurrence pricing is higher up front because the insurer accepts a long tail - a claim can arrive a decade after the policy expired for latent injury or environmental harm. This is why long-tail lines (products, pollution, professional liability) favor claims-made, where the insurer can reserve more accurately, and short-tail lines favor occurrence. The exam rewards knowing why each form fits its exposure, not just how the trigger works.

Why the Difference Matters on the Exam

Claims-made pricing starts low and matures over about five years as the pool of possible past injuries grows. Insureds switching carriers must keep the same or earlier retroactive date to avoid a gap - a later retro date silently erases years of past exposure.

Occurrence forms create a long tail for insurers because a claim can arrive a decade after the policy expired (think latent injury or environmental harm), which is why professional and product lines often prefer claims-made.

The Five Reporting Tiers of a Claims-Made Policy

Claims-made coverage is built on layered triggers candidates must keep straight:

1. Retroactive date - earliest covered injury date.
2. Policy period - the active term during which claims are normally reported.
3. Automatic (basic) ERP - typically a 60-day window to report claims, plus a longer window (often 5 years) for incidents the insured noticed and reported during the term.
4. Supplemental (optional) ERP - a purchased tail giving unlimited reporting time for pre-expiration injury.
5. Maturity - after roughly five years, premium reaches the level of a comparable occurrence policy.

Bold rule: the supplemental tail must usually be requested within 60 days of cancellation or non-renewal, or the right is lost.

Choosing Between the Two Forms

Underwriters and insureds weigh the trade-offs:

Long-tail lines such as products liability, pollution, and professional liability favor claims-made because the insurer can reserve more accurately. Exam trap: an insured who lets a claims-made policy lapse without buying tail coverage is exposed for every past loss reported afterward.