11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates
Key Takeaways
- Occurrence forms (CG 00 01) trigger on when bodily injury or property damage happened; claims-made forms (CG 00 02) trigger on when the claim is first made against the insured.
- A retroactive date sets the earliest covered injury date on a claims-made policy; any BI/PD occurring before it is excluded forever, even if reported during the active period.
- Advancing the retroactive date on renewal opens a coverage gap, so insurers normally keep it fixed; an incoming insurer can grant prior-acts (nose) coverage by carrying the old retro date forward.
- The basic ERP (tail) is automatic and short (commonly 60 days to report plus a ~5-year mini-tail); the supplemental ERP (maxi-tail) is purchased and gives an unlimited reporting window for pre-expiration injuries.
- Claims-made premiums step up through maturity years 1-5 and then level off, while occurrence premiums stay comparatively stable and have no retroactive date or maturity curve.
Two Coverage Triggers
ISO publishes the CGL in two trigger formats. The occurrence form (CG 00 01) responds when bodily injury (BI) or property damage (PD) actually happens during the policy period, no matter when the claim is reported. The claims-made form (CG 00 02) responds only when a claim is first made against the insured during the policy period (or an applicable extended reporting period), provided the injury did not occur before the retroactive date.
- Occurrence trigger = when the harm took place.
- Claims-made trigger = when the demand reaches the insured or insurer.
The distinction drives long-tail exposures such as construction defect, pollution, and product injury that surface years after the work.
The Retroactive Date
A retroactive date is the earliest date of injury a claims-made policy will cover. Any BI/PD that occurs before the retroactive date is excluded, even if the claim is filed during the active policy period. Advancing (moving forward) the retroactive date on renewal creates a coverage gap, so insurers usually keep it unchanged to maintain seamless protection.
Claims-made coverage matures through years labeled Year 1, Year 2, Year 3, and subsequent, with premiums rising each year as the exposure window widens, then leveling off at maturity (often Year 5). Occurrence coverage has no retroactive date and no maturity curve.
Extended Reporting Periods (Tail Coverage)
When a claims-made policy is canceled or non-renewed, claims reported afterward could fall through the cracks. ISO addresses this with Extended Reporting Periods (ERPs), commonly called tail coverage:
- Basic Extended Reporting Period - automatic, no extra premium; a short window (commonly 60 days) to report claims plus a longer window (commonly 5 years) for occurrences already noticed to the insurer.
- Supplemental Extended Reporting Period - purchased by endorsement for additional premium; provides an unlimited reporting window for injuries that occurred after the retroactive date but before the policy ended.
ERPs do not cover new injuries that happen after expiration - they only extend the time to report old ones.
Retroactive Dates, Tail Coverage, and Worked Triggers
The CGL is sold on two triggers. An occurrence form covers injury or damage that happens during the policy period, no matter when the claim is reported. A claims-made form covers claims first made during the policy period (or extended reporting period) for injury or damage occurring on or after the retroactive date. The retroactive date is the linchpin: anything before it is excluded forever.
| Feature | Occurrence | Claims-Made |
|---|---|---|
| Coverage trigger | Injury occurs in period | Claim made in period |
| Long-tail/latent claims | Covered by the year of injury | Must keep retro date intact |
| Gaps on switching insurers | Rare | Common — needs tail or nose |
| Premium maturity | Stable | "Steps up" over first 5 years |
To prevent gaps, claims-made policies offer Extended Reporting Periods (ERPs): a basic tail (automatic, e.g., 60 days to report, plus a mini-tail of ~5 years for occurrences reported late) and a supplemental tail (purchased, often unlimited reporting time). Switching insurers, an incoming insurer can grant prior-acts ("nose") coverage by carrying the old retro date.
Worked scenario: A consultant injures a third party (property damage) in 2024 under a claims-made CGL with a 2022 retro date, but the claim arrives in 2026 after the policy lapsed without buying tail coverage. The claim is uncovered: it was not made during the policy period and no ERP was purchased. Had the policy been occurrence-based, the 2024 policy would respond regardless of the 2026 report date.
Mini-Tail, Maxi-Tail, and Switching-Carrier Worked Traps
Claims-made CGL forms build in a layered reporting structure. The basic ERP automatically grants a short window (commonly 60 days) to report claims after the policy ends, plus a "mini-tail" of about five years to report claims for occurrences that happened during the policy but were reported late. The supplemental ERP ("maxi-tail") is purchased and typically provides an unlimited reporting period for occurrences during the policy term.
Worked switching scenario: A business carries a claims-made CGL with a 2021 retro date, then in 2025 moves to a new insurer. To avoid a gap, the business can either (a) buy a supplemental tail from the old insurer for claims arising from pre-2025 acts, or (b) ask the new insurer to grant prior-acts (nose) coverage by carrying the 2021 retro date forward. If it does neither and a 2023 occurrence produces a 2026 claim, no policy responds — the old one is expired and the new one excludes pre-2025 (or post-retro) acts.
Recognizing that the retro date plus an ERP (tail) or nose coverage closes the gap when switching insurers is the central exam skill for claims-made CGL.
A contractor's claims-made CGL has a retroactive date of January 1, 2024. In 2026 a homeowner sues over water damage that began in 2023. The claim is reported during the active 2026 policy. Is it covered?
Choosing Between the Forms
| Feature | Occurrence (CG 00 01) | Claims-Made (CG 00 02) |
|---|---|---|
| Trigger | Injury during period | Claim made during period |
| Retroactive date | None | Required |
| Tail / ERP | Not needed | Needed at expiration |
| Long-tail late claims | Old policy responds | Current policy or ERP responds |
| Premium pattern | Stable | Rises Years 1-5, then matures |
Occurrence forms are simpler for the insured because the year of injury permanently "owns" the claim. Claims-made forms let insurers price recent loss data more accurately, which is why they dominate professional liability and some high-hazard CGL classes.
Which statement about an occurrence-based CGL is correct?
Key Takeaways
- Occurrence forms trigger on when the injury happened; claims-made forms trigger on when the claim is first made.
- A retroactive date sets the earliest covered injury date on a claims-made policy; injury before it is excluded.
- Advancing the retroactive date on renewal opens a coverage gap, so insurers normally keep it fixed.
- Basic ERP is automatic and short; Supplemental ERP is purchased and gives an unlimited reporting window for pre-expiration injuries.
- Claims-made premiums rise through maturity years; occurrence premiums stay comparatively stable.
Occurrence and claims-made CGL forms differ entirely in what activates coverage - the date of injury versus the date of the claim. Claims-made policies add a retroactive date and rely on extended reporting periods to close the gaps that arise when a policy ends, while occurrence policies permanently assign each loss to the year the harm took place.