8.3 Occurrence vs. Claims-Made Triggers

What a Coverage Trigger Is

A coverage trigger decides which policy responds to a loss when the act and the resulting claim fall in different policy years. The ISO Commercial General Liability program (CG 00 01) is written on an occurrence form; the claims-made counterpart is the CGL Claims-Made coverage form (CG 00 02). Professional liability, D&O, and EPLI are commonly written claims-made.

• Occurrence trigger: coverage applies if the bodily injury or property damage happens during the policy period, no matter when the claim is filed.
• Claims-made trigger: coverage applies if the claim is first made against the insured during the policy period (and the injury occurred on or after the retroactive date).

Occurrence vs. Claims-Made Side by Side

Long-tail trap: A 2019 product injury that is not discovered and sued until 2026 is covered by the 2019 occurrence policy — the one in force when the injury happened — not the current policy.

The Three Claims-Made Dates

Claims-made forms turn on a timeline you must master:

1. Retroactive date — the earliest injury date the policy will cover. Injury before this date is excluded forever. A claims-made policy with the retro date equal to the inception date is the most restrictive.
2. Policy period — the claim must be first made during this window.
3. Extended Reporting Period (ERP / "tail") — extends the time to report claims after the policy ends, for injuries that occurred before expiration.

ISO provides a Basic ERP automatically: a 60-day tail to report claims for known occurrences, plus a 5-year mini-tail for claims arising from occurrences reported during the policy. A Supplemental ERP (purchased, often within 60 days of expiration) provides an unlimited reporting period.

Why Triggers Matter at Renewal

Gaps appear when an insured switches between forms or carriers.

• Switching from occurrence to claims-made: generally safe — past occurrence policies still respond to old injuries.
• Switching from claims-made to occurrence: buy an ERP/tail on the expiring claims-made policy, or claims reported after expiration for old injuries go uncovered.
• Changing claims-made carriers: the new policy's retroactive date should match the old one ("prior acts" coverage) to avoid a gap.

Maturity and premium: a first-year ("step 1") claims-made policy is cheap because few prior injuries can mature into claims; by year five it reaches mature pricing approaching occurrence cost. Expect a question contrasting why claims-made starts cheaper but converges over time.

Worked Timeline: Reading a Claims-Made Scenario

Work the dates in sequence. Suppose a physician's policy has a retroactive date of January 1, 2022 and a policy period of 2025. Test each event:

• Injury in 2021, claim in 2025 -> NOT covered: the injury predates the retroactive date.
• Injury in 2023, claim in 2025 -> covered: injury is on/after retro and the claim is first made in the policy period.
• Injury in 2023, claim in 2027 with no tail -> NOT covered: the claim was not made during the policy period and no ERP was purchased.
• Same facts with a Supplemental ERP -> covered: the unlimited tail extends the time to report.

The lesson: a claims-made policy needs both a qualifying injury date (on/after the retro date) and a claim or report within the policy period or its ERP.

Occurrence Triggers in Long-Tail Disputes

Occurrence policies create their own puzzle when injury is continuous — asbestos, pollution, or repeated chemical exposure that spans many policy years. Courts apply competing trigger theories to decide which years respond:

• Exposure trigger — the policy in force when the claimant was first exposed.
• Manifestation trigger — the policy in force when the injury became reasonably apparent.
• Continuous (triple) trigger — every policy from exposure through manifestation is on the risk, often shared pro rata.

For the licensing exam you do not need to litigate these, but you should recognize that an occurrence form ties to when injury happened, which is why it suits long-tail products and completed-operations exposures, and why insurers added the products-completed operations aggregate to cap that long tail separately.

Step Pricing and the Five-Year Maturation

Because a claims-made policy can only be hit by claims reported during its term, its early exposure is small and its premium reflects a step factor that climbs each year until the policy is mature:

A buyer who lets a claims-made policy lapse without a tail loses protection for years of premium already paid, which is why the Supplemental ERP (unlimited reporting) matters when coverage ends. Conversely, a long-time claims-made insured who switches to an occurrence form should buy tail on the expiring policy so that pre-switch injuries reported later remain covered. The exam frames this as a producer's errors-and-omissions exposure: failing to advise a client about tail coverage at expiration is a classic E&O claim.