11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates

Two coverage triggers, two ISO forms

The CGL is sold on two coverage triggers. The trigger determines which policy must respond when a long-tail liability claim surfaces years after the work was done.

• Occurrence form — ISO CG 00 01. Coverage is triggered by when the bodily injury or property damage occurs, regardless of when the claim is filed. The policy in force during the year the injury happened responds, even if the claim arrives a decade later.
• Claims-Made form — ISO CG 00 02. Coverage is 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.

The Retroactive Date

The Retroactive Date appears only on claims-made forms. It is the earliest date on which an occurrence can take place and still be covered. Any bodily injury or property damage that occurred before the Retroactive Date is excluded, no matter when the claim is reported.

When an insured renews a claims-made policy continuously, the Retroactive Date should stay fixed at the original inception so the protected window keeps lengthening. Advancing the Retroactive Date creates a coverage gap — a major exam trap. A blank or 'none' Retroactive Date means full prior-acts (nose) coverage with no prior limit.

The claims-made maturity ladder

Claims-made premiums rise each year for the first several years because the exposure window widens.

A fifth-year-and-beyond policy is called mature and is priced roughly the same as an occurrence policy because its exposure window is fully developed.

Extended Reporting Periods (tail coverage)

When a claims-made policy is cancelled or not renewed, claims made after expiration would otherwise be uncovered. ISO provides Extended Reporting Periods (ERPs) to fill that gap:

• Basic ERP (automatic, no charge): A short 'mini-tail' — the basic ISO CG 00 02 grants a 60-day window for claims made after expiration plus a 5-year window for occurrences already reported as potential claims (incidents) before expiration. It applies automatically.
• Supplemental ERP (purchased): An unlimited-duration tail that must be requested in writing, generally within 60 days of termination, for an additional premium (capped by ISO at up to 200% of the annual premium). It does not reset or advance the Retroactive Date.

Choosing between triggers

Occurrence forms are simpler and avoid retroactive-date gaps, which is why most small-commercial CGLs are written on CG 00 01. Claims-made forms dominate where losses have a long latency — professional liability, pollution, and some products risks — because the insurer can reserve more accurately for claims reported in the current year. The exam wants you to recognize: occurrence = when it happened; claims-made = when the claim is reported, gated by the Retroactive Date.

Worked Trigger Scenarios

Apply the rules to facts. Occurrence example: a CG 00 01 policy in force for 2025 covers a 2025 injury even if suit is filed in 2032; the 2032 carrier is not on the risk. Claims-made example: a CG 00 02 policy with a 1/1/2024 Retroactive Date, in force for 2027, covers a claim first made in 2027 for an injury that occurred in 2025 - both the after-retro-date test and the reported-during-term test are met. Gap example: the same injury occurring in 2023 (before the retro date) is not covered even though the claim is made during the 2027 term.

Drilling these three patterns prepares you for the trigger questions that appear on nearly every casualty exam.

Switching Carriers Without a Gap

The practical danger with claims-made coverage is the transition between insurers. When moving to a new claims-made policy, the insured should either negotiate a matching retroactive date (preserving prior-acts coverage) or purchase a supplemental ERP on the expiring policy to catch late-reported claims. Leaving the old policy without a tail and accepting a new policy with a current retro date creates an uncovered window for injuries that already occurred. An insured retiring or selling a business almost always needs the supplemental ERP, because no future policy will pick up claims reported after the business stops buying coverage.

Nose Coverage vs. Tail Coverage

The complement to the ERP "tail" is prior-acts (nose) coverage - a new insurer agreeing to a retroactive date that reaches back to the original claims-made inception, so the new policy covers old injuries reported during its term. Tail coverage looks forward (extending reporting time after a policy ends); nose coverage looks backward (extending the covered injury window before a policy began).

Recognizing which solution a scenario calls for - tail when a policy is ending, nose when a policy is beginning - is a frequently tested distinction. In short, a retiring insured buys a tail; an insured switching carriers negotiates a matching retro date (nose) on the new policy.