11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates

Two Coverage Triggers

The CGL is sold on two different ISO forms that differ in when coverage attaches - the coverage trigger. This single distinction is the most-tested concept in the entire CGL chapter.

• Occurrence form (CG 00 01): coverage is triggered when the bodily injury or property damage occurs during the policy period, no matter when the claim is eventually filed.
• Claims-made form (CG 00 02): coverage is triggered when the claim is first made against the insured during the policy period (and the injury occurred on or after a stated retroactive date).

Occurrence Trigger in Action

Under an occurrence policy, the date of injury controls, not the date of the lawsuit.

Worked example. A contractor carries an occurrence CGL for calendar year 2024. A customer slips and is injured in December 2024 but does not sue until 2026. The 2024 occurrence policy responds, because the injury occurred during its period. Even if the contractor switched insurers in 2025, the 2024 policy still pays. This built-in long-tail protection is why occurrence coverage is generally preferred by insureds.

Latent-injury trap. Occurrence forms can be triggered decades later. A worker exposed to a harmful substance in 2010 who develops illness diagnosed in 2026 may trigger the 2010 occurrence policy if injury is deemed to have begun then. The exam rewards candidates who match the loss to the year the injury occurred, not the year it surfaced.

Claims-Made Trigger and the Retroactive Date

A claims-made policy responds only when both conditions are met:

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

The retroactive date is the line in the sand - injuries that occurred before it are never covered, no matter when the claim is filed.

Worked example. A claims-made CGL for 2024 carries a retroactive date of January 1, 2020:

Never advance (move forward) a retroactive date when renewing - doing so wipes out coverage for prior-acts exposure, creating a gap that the exam loves to test.

Extended Reporting Periods (Claims-Made Only)

Because a claims-made policy stops responding once it expires, departing insureds need a tail to report claims that arrive later for injuries that already occurred.

• Basic ERP (the "mini-tail"): automatic and free. It reports claims for a short window - generally 60 days for claims arising from any occurrence, plus an extended 5 years for occurrences already reported to the insurer during the policy.
• Supplemental ERP (the "full tail"): purchased by endorsement for extra premium, giving an unlimited reporting period. It must be requested in writing within 60 days of cancellation or non-renewal.

Why this matters. When a business switches from claims-made to a new carrier, it either buys a supplemental ERP from the old insurer or arranges prior-acts (nose) coverage with the new one. Failing to do either leaves a coverage gap for old injuries reported in the future.

Premium Patterns and Why Form Choice Matters

A claims-made premium starts low in year one because few prior years are exposed, then steps up each renewal toward a mature premium - usually around year five - as more prior-acts years come under coverage.

An occurrence premium is comparatively level, because each policy stands alone for the injuries that happened in its own period. Occurrence coverage suits most general business exposures; claims-made is used in long-tail lines such as professional liability and products, where insurers need to control delayed losses - but it demands careful management of retroactive dates and ERPs to avoid gaps.

Occurrence vs. Claims-Made Triggers

The CGL is written on two coverage triggers, and the difference controls when a policy responds. An occurrence policy covers bodily injury or property damage that happens during the policy period, no matter when the claim is later filed - even years after expiration. A claims-made policy covers claims first made against the insured during the policy period (and reported per its terms), provided the injury occurred on or after the retroactive date.

Occurrence is broader for the insured and is the default for standard CGLs; claims-made is used for long-tail exposures (products, professional, pollution) where injuries surface years after the act.

Retroactive Date and the Coverage Triggers Test

A claims-made policy will not pay for injury that occurred before the retroactive date, even if the claim arrives during the policy period - this single rule is the most tested claims-made fact. To respond, both conditions must be met: the injury occurred on or after the retro date, and the claim is first made during the policy period. Advancing or eliminating a retroactive date on renewal broadens coverage; setting it forward creates a gap. A scenario where injury happened before the retro date is denied; one where the injury falls after the retro date and the claim arrives in-period is covered.

Extended Reporting Periods (Tail Coverage)

Because claims-made coverage can leave a gap when a policy is not renewed, the CGL offers Extended Reporting Periods (ERPs). The Basic ERP is automatic and provides a short window (commonly a 5-year "mini-tail" for claims arising from reported occurrences, plus a 60-day window to report new claims) at no extra charge. The Supplemental ERP is purchased by endorsement for an unlimited time to report claims for injuries that occurred before the policy ended. Tail coverage matters when a business switches insurers, retires, or moves from claims-made to occurrence - without it, late-reported claims fall through the gap.