8.3 Occurrence vs. Claims-Made Triggers
Key Takeaways
- Occurrence forms respond when the injury happens during the term; claims-made forms respond when the claim is first made during the term.
- The ISO CGL is issued as CG 00 01 (occurrence) and CG 00 02 (claims-made), differing only in trigger.
- Claims-made coverage requires injury on or after the retroactive date; injuries before it are never covered regardless of report timing.
- Extended Reporting Periods (basic 60-day mini-tail, 5-year midi-tail, and supplemental unlimited tail) preserve coverage for claims reported after expiration.
What a Coverage Trigger Is
A coverage trigger is the event that determines which policy responds to a loss. Liability forms use one of two triggers, and the difference dominates a large share of national exam questions, especially around the ISO Commercial General Liability (CGL) program.
| Trigger | Policy Responds When... | Typical Lines |
|---|---|---|
| Occurrence | Bodily injury or property damage takes place during the policy period | CGL occurrence form CG 00 01, Homeowners, Personal Auto |
| Claims-made | A claim is first made against the insured during the policy period (or extended reporting period) | CGL claims-made form CG 00 02, professional liability, D&O |
Key point: The ISO CGL is issued in two coverage forms — CG 00 01 (occurrence) and CG 00 02 (claims-made) — that share the same body of coverages but differ only in trigger.
How the Claims-Made Trigger Works
A claims-made policy responds only if the claim is reported during the policy period, and only for events on or after the retroactive date. Two devices control its edges:
- Retroactive date — the earliest date a covered injury may occur. Injuries before the retro date are never covered, no matter when reported. Advancing the retro date forward (toward the present) shrinks coverage — a tested trap.
- Extended Reporting Period (ERP) / 'tail' — preserves coverage for claims reported after the policy ends but arising from covered events during the term.
The Three ERP Tails (ISO CGL Claims-Made)
| Tail | Cost | Duration | How Obtained |
|---|---|---|---|
| Basic ERP — Mini-tail | Automatic, no charge | 60 days for any claim | Automatic at expiration |
| Basic ERP — Midi-tail | Automatic, no charge | 5 years if injury reported within 60 days | Automatic |
| Supplemental ERP | Additional premium | Unlimited reporting time | Must be requested, usually within 60 days |
The Five Claims-Made Maturity Steps and Why the Trigger Matters
Claims-made coverage 'matures' year by year as the retro date stays fixed while the policy period advances, increasing the spread of covered prior years. The exam stresses the danger of gaps when switching insurers or forms.
- Moving from claims-made to occurrence, or letting a policy lapse without buying a tail, can leave a hole for events that occurred but have not yet generated a claim.
- Switching from occurrence to claims-made requires the new retro date to reach back far enough to avoid a gap.
Long-Tail Exposures
Claims-made coverage exists because some liabilities — medical malpractice, professional errors, latent product or environmental harm — surface years after the act. Pricing an occurrence policy for such 'long-tail' risk is difficult, so insurers prefer the claims-made trigger that ties coverage to the report date they can control.
Trap: 'The claim was first made this year, but the injury happened before the retroactive date.' No coverage — the retro date defeats it even though the claim was timely reported.
Comparing the Cost and Coverage Profiles
Why do insurers and buyers choose one trigger over the other? The trade-offs are tested conceptually.
| Feature | Occurrence | Claims-Made |
|---|---|---|
| Coverage certainty | High — the policy in force when injury happens responds, even decades later | Depends on retro date and tail being maintained |
| Early-year premium | Higher | Lower (matures upward each renewal) |
| Gap risk on switching | Low | High if retro date or tail mishandled |
| Best fit | Short-tail, premises/operations risk | Long-tail professional, medical, management risk |
Reporting a Known Claim or Circumstance
Claims-made forms typically let an insured report a known circumstance that may give rise to a claim before the policy expires; doing so 'locks in' that policy as the one that responds even if the actual claim arrives years later. Failing to report a circumstance you knew about can forfeit coverage — a fairness mechanism the exam may describe as a notice or 'laser' condition.
Stacking Across Years (Occurrence)
Because an occurrence policy responds based on when injury happened, a long-developing harm (such as continuous exposure) can implicate multiple policy years. Courts apply allocation theories to spread the loss, but the practical exam point is simple: under occurrence, find the year(s) the injury took place; under claims-made, find the year the claim was first made and confirm the injury followed the retro date.
Tail vs. Nose (Prior Acts) Coverage
When an insured leaves a claims-made program, the tail (supplemental ERP) bought from the expiring insurer covers late-reported claims for past acts. The mirror-image option is 'nose' or prior-acts coverage: the new insurer agrees to set a retroactive date far enough back to pick up those past acts, eliminating the gap without buying a tail.
Buyers usually prefer nose coverage because it folds the exposure into the ongoing policy at a lower marginal cost. The exam may ask which device prevents a gap when changing carriers — both work, but only one is purchased from the departing insurer (tail) versus the arriving insurer (nose/prior acts).
A claims-made CGL has a retroactive date of January 1, 2024. An injury occurs in November 2023 but the claim is first made against the insured in March 2026 while the policy is in force. How does the policy respond?
Which statement about the ISO CGL forms is correct?