11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates

Two Coverage Triggers, Two Forms

ISO publishes the CGL in two trigger versions. The trigger is the event that determines which policy year must respond:

• Occurrence form (CG 00 01): triggered by when the bodily injury or property damage occurs, regardless of when the claim is filed. The policy in force on the date of loss responds, even if the claim is made years later.
• Claims-made form (CG 00 02): triggered by when the claim is first made against the insured, provided the injury occurred on or after the Retroactive Date and the claim is reported during the policy period (or any extended reporting period).

Occurrence is the default for most general liability. Claims-made is used where the gap between the act and the discovery of harm can be long — medical malpractice, environmental, and many professional exposures — so insurers can reserve more accurately.

The Occurrence Trigger in Practice

Under an occurrence policy running January 1 to December 31, 2024, the date the injury happened is what counts.

• Injury occurs June 2024, claim filed 2027 -> covered by the 2024 policy (occurrence within the period).
• Injury occurs December 2023, claim filed 2024 -> not covered by the 2024 policy; the 2023 policy responds.

This produces the well-known long tail: an occurrence policy can be pulled back into a claim decades later for latent injuries. The advantage to the insured is that there are no gaps between consecutive occurrence policies and no need for tail coverage when switching carriers.

Retroactive Date and the Claims-Made Triggers

A claims-made policy requires three conditions to all be satisfied: the injury occurred on or after the Retroactive Date, the claim is first made against the insured during the policy period, and the claim is reported to the insurer within the period or its Extended Reporting Period.

Worked example. Claims-made CGL effective 2024 with a Retroactive Date of January 1, 2020:

• Injury 2018, claim made 2024 -> NOT covered (injury predates the retro date).
• Injury 2021, claim made 2024 -> covered (after retro date, claim made in-period).
• Injury 2021, claim first made after the policy ends and no ERP purchased -> not covered.

Advancing or 'sliding' the retroactive date forward at renewal silently strips coverage for prior acts — a classic consumer trap and a tested point.

Extended Reporting Periods (Tail Coverage)

When a claims-made policy ends, claims for past acts that have not yet surfaced would otherwise be uncovered. ISO solves this with Extended Reporting Periods (ERPs):

Key rules to memorize:

• An ERP does not change the Retroactive Date and does not increase the limits.
• The supplemental tail must usually be requested within 60 days of policy termination.
• When moving from a claims-made carrier to an occurrence carrier, the insured needs tail coverage; when moving from occurrence to claims-made, the new policy needs prior acts (nose) coverage via a matching retro date.

The Five-Year Claims-Made Maturity Ladder

Claims-made premiums start low and rise each year for the first several years as the 'tail' of covered prior acts deepens. A policy is considered mature (first-year, second-year, third-year, fourth-year, then mature) typically after five years, at which point the retro date is five-plus years back and the rate stabilizes near the occurrence rate.

• First-year (immature): retro date equals the inception date, so very little prior-acts exposure; lowest premium.
• Mature: retro date is well in the past; premium approaches the equivalent occurrence rate.

Why this matters for the exam

Questions exploit the cost illusion: a first-year claims-made policy looks cheaper than an occurrence policy, but the saving disappears as the policy matures or when the insured eventually buys the supplemental tail. The tail premium for a mature policy is often 150% to 200% of the last annual premium — a number candidates are expected to recognize as substantial rather than trivial.

Trigger Comparison at a Glance

Use this side-by-side to lock in the distinctions the exam tests repeatedly:

Bottom-line trap: an occurrence policy never needs tail coverage and has no retro date, while a claims-made policy is worthless for a past act if either the retro date or the reporting requirement is not satisfied. Match the trigger to the question's timeline before you pick an answer.

Choosing Between the Two CGL Triggers

When advising a client, match the trigger to the exposure. A business with short-tail, immediately apparent claims (a slip-and-fall retailer) is well served by occurrence coverage, where the policy in force when the injury happens responds no matter how late the claim arrives. A business with long-tail exposures (contractors, product makers, professional firms) often must accept claims-made coverage because insurers price long-tail risk more confidently when the policy in force when the claim is made responds.

Switching from claims-made back to occurrence, or changing carriers, requires careful handling of the retroactive date to avoid a coverage gap for past work.