Occurrence vs. Claims-Made CGL and Retroactive Dates
Key Takeaways
- Occurrence forms trigger on when the injury occurs; claims-made forms trigger on when the claim is first made, plus an injury on/after the retroactive date.
- The Retroactive Date bars losses occurring before it; advancing it on renewal or at a carrier change creates a coverage gap.
- Basic ERP is automatic (60-day report window plus 5 years for occurrences reported during the term); Supplemental ERP must be bought within 60 days and is unlimited.
- Claims-made premiums 'step up' yearly until mature (~year 5), so early-year savings reflect a shorter window of covered prior acts.
- Defense and tail-coverage management are core producer E&O concerns when switching between claims-made carriers.
Two Coverage Triggers, One Critical Decision
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. This is among the most frequently missed exam topics because the distinction turns on when something happens, not how much is paid. Get the trigger right and the retroactive-date and tail-coverage questions fall into place.
The Occurrence Trigger
An occurrence form responds when the bodily injury or property damage occurs during the policy period, regardless of when the claim is finally made or reported. A claim filed in 2030 for an injury that took place in 2026 is the 2026 policy's problem. This makes occurrence coverage simple for the insured but creates 'long-tail' exposure for insurers, who may pay claims years after a policy expires. Occurrence forms are the default for general contractors and most main-street risks.
The Claims-Made Trigger
A claims-made form responds only if the claim is first made against the insured during the policy period (or any applicable extended reporting period) AND the injury occurred on or after the Retroactive Date. Two conditions must both be satisfied. Insurers favor claims-made for hard-to-reserve exposures (pollution, medical malpractice, professional liability) because each year's premium matches that year's reported claims rather than a tail of future surprises.
Side-by-Side Comparison
| Feature | Occurrence (CG 00 01) | Claims-Made (CG 00 02) |
|---|---|---|
| Trigger | Injury occurs during policy period | Claim first made during policy period |
| Retroactive Date | Not used | Required; bars injuries before it |
| Extended Reporting Period (tail) | Not needed | Basic + Supplemental available |
| Long-tail exposure | Borne by insurer | Shifted toward insured |
| Typical premium pattern | Higher early, stable | Lower early, 'steps up' to mature |
| Common uses | Premises, products, contractors | Malpractice, pollution, professional |
The Retroactive Date
The Retroactive Date is the cutoff on a claims-made policy: injuries or damage that occurred before that date are not covered, even if the claim is made during the current policy period. When an insured first buys claims-made coverage, the retroactive date is usually set equal to the inception date. On each renewal it should stay the same. Advancing (moving forward) the retroactive date creates a coverage gap for losses occurring between the old and new dates - a classic exam trap and an E&O risk for producers.
The CGL Comes in Two Trigger Versions
ISO publishes the CGL on an occurrence form (CG 00 01) and a claims-made form (CG 00 02). Choosing between them - and managing the retroactive date and tail - is among the most tested commercial-casualty topics.
| Trigger | Activates When | Best For |
|---|---|---|
| Occurrence | Injury/damage happens during the term | Most standard accounts; long-tail simplicity |
| Claims-made | Claim is first made during the term (on/after retro date) | Professional/long-tail exposures, market-driven |
Retroactive Date and Coverage Gaps
A claims-made form covers only claims for injury that occurred on or after the retroactive date and that are first reported during the policy period. If the retroactive date advances on renewal, or if an insured switches from claims-made to occurrence (or insurers) without a tail, a gap opens for claims arising from earlier work. The exam loves a timeline where injury, claim, and policy dates must be lined up to decide which form responds.
Extended Reporting Periods (Tails)
| Tail | Trigger / Length |
|---|---|
| Basic ERP (automatic) | A short window (e.g., 60 days) to report claims for known occurrences, plus a longer window (e.g., 5 years) for occurrences already reported during the term |
| Supplemental ERP (purchased) | Activated by endorsement within 60 days of cancellation/nonrenewal; often unlimited reporting time |
When a Claim Is "First Made"
A claim is first made on the earliest date the insurer or any insured receives written notice of the claim, or the date the insurer first receives notice of an occurrence likely to result in a claim (notice provisions can "lock in" the policy year). Understanding that early notice of a potential claim preserves coverage in the current year - even if the formal suit arrives later - is the practical payoff the exam tests, alongside the rule that an occurrence form never needs a tail because its trigger is the date of injury, not the date of claim.
A claims-made CGL has a policy period of 1/1/2026 to 1/1/2027 and a Retroactive Date of 1/1/2024. A bodily injury occurred on 6/1/2023, and the claim is first made against the insured on 3/1/2026. Is the claim covered?
Extended Reporting Periods (Tail Coverage)
Because a claims-made policy stops responding once it expires, ISO provides Extended Reporting Periods (ERPs) to cover claims made after expiration for injuries that occurred during the policy term (on or after the retro date):
- Basic ERP (the 'mini-tail'): automatic, no extra premium. It gives a 60-day window to report claims for occurrences already known, plus a 5-year window for claims arising from occurrences reported to the insurer during the policy period.
- Supplemental ERP: must be purchased (an endorsement) within 60 days of policy termination, carries an unlimited reporting period, and reinstates aggregate limits.
The Five Claims-Made 'Steps' and Premium Maturity
Claims-made programs use step factors. A first-year ('Year 1') claims-made policy is cheapest because, with the retro date at inception, only that year's exposures can produce a claim. Each renewal 'steps up' the rate as the window of covered prior years widens, until the policy is mature (typically year 5) and priced comparably to occurrence coverage.
Exam questions test that early-year claims-made savings are not free - they reflect a shorter window of insurable history. A producer who sells a Year-1 claims-made policy purely on price, without explaining the step-up and the eventual cost of tail coverage, sets up an unhappy renewal conversation and potential E&O exposure when the buyer later realizes the rate climbs each year.
Why Carriers Choose Claims-Made
Claims-made coverage exists to solve the reserving problem on long-tail risks. With occurrence coverage, an insurer must hold reserves for decades against latent injuries (asbestos and pollution are the textbook cautionary tales). Claims-made lets the carrier match premium to the claims actually reported in a year, making the book far more predictable. That is why malpractice, D&O, E&O, environmental, and many professional-liability lines are written almost exclusively on claims-made forms.
An insured is moving from one claims-made carrier to another and the new policy sets its Retroactive Date to the new inception date instead of matching the old retro date. What is the primary consequence the producer should address?