11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates

Two ways to define the coverage trigger

ISO publishes the CGL in two trigger versions: the occurrence form (CG 00 01) and the claims-made form (CG 00 02). The trigger determines which policy responds to a loss, and it is one of the most heavily tested casualty concepts. The distinction matters most for long-tail exposures (construction defects, pollution, products) where the injury and the claim can be years apart.

Occurrence form

The occurrence form responds when the bodily injury or property damage takes place during the policy period, regardless of when the claim is finally reported - even years after the policy expires. A 2026 occurrence form will still pay a suit filed in 2031 if the injury occurred in 2026. This is why occurrence coverage is preferred by insureds: it has no reporting deadline and needs no tail. The downside for insurers is 'long-tail' uncertainty, which is exactly why pollution and asbestos losses became so costly.

Claims-made form and the two triggers

The claims-made form requires two conditions to be met:

1. The claim must be first made against the insured during the policy period (or extended reporting period); AND
2. The injury must occur on or after the Retroactive Date shown in the Declarations.

If either condition fails, there is no coverage. The Retroactive Date is the linchpin: injuries before that date are never covered, no matter when the claim arrives.

Comparison table

Retroactive date traps

The Retroactive Date should remain constant as a claims-made program is renewed year after year. Two events break coverage:

• Advancing the retro date on renewal creates a gap - injuries between the old and new retro dates lose coverage.
• Switching from claims-made to occurrence (or to a new claims-made insurer with a later retro date) can strand prior acts unless a tail is purchased.

Exam tip: a later (more recent) retroactive date is worse for the insured because it excludes more past activity.

Extended Reporting Periods (the 'tail')

When a claims-made policy ends, two reporting extensions protect the insured:

• Basic (mini) tail - automatic and free. It gives a short window (commonly 60 days) to report claims, plus a 5-year window for incidents reported as potential claims during the policy. It does NOT extend the limits.
• Supplemental (full) tail - must be purchased, usually within 60 days of expiration, for an unlimited reporting period for injuries that occurred after the retro date but before policy expiration. The supplemental tail reinstates a fresh aggregate limit equal to the expiring policy's.

When a tail is triggered

An Extended Reporting Period applies only when a claims-made policy is canceled or not renewed, or when it is renewed or replaced with coverage that has a later retroactive date or that is written on an occurrence basis. The ERP does not increase limits beyond the supplemental reinstatement and does not cover injuries occurring after the policy ended - it only extends the time to report claims for injuries already within the covered window. A claim reported during the ERP is deemed to have been made on the last day of the policy period.

Step-rated maturity and pricing

Claims-made programs are cheaper in their first 'immature' years because few prior acts are exposed, then 'step up' in price each year until the program reaches the mature rate (typically year five), when the retro date is far enough back that the exposure resembles an occurrence policy. Producers explain this so insureds are not surprised by rising renewals. An insured who switches carriers every year to chase a low immature rate risks stranding prior acts and may be forced to buy an expensive tail when no carrier will accept the old retro date.

Practical decision guide

When advising an insured, the producer weighs cost against certainty. Occurrence coverage costs more up front but removes reporting deadlines and the need for a tail - ideal for short-tail trades and insureds who want simplicity. Claims-made coverage suits long-tail professional and products exposures and lets the insurer manage reserves, but it demands disciplined retro-date continuity and a tail at exit. The exam frequently tests the consequence of mishandling either trigger, so anchor every answer to when the injury occurred and when the claim was first made.

Stacking and non-stacking of limits

A subtle but tested difference: occurrence policies can stack across years. If a continuous injury (gradual leakage, repeated exposure) spans three occurrence policies, courts may allocate the loss across each year's separate limits, multiplying the recovery. Claims-made policies do not stack - only the single policy in force when the claim is first made responds, capped at one set of limits. This is one reason insurers prefer claims-made for long-tail and continuous-trigger exposures: it eliminates multi-year limit stacking that can balloon a long-tail loss.

Reading the Declarations

On an exam fact pattern, the first task is to confirm the trigger by reading the Declarations. A claims-made form will conspicuously show 'CLAIMS-MADE' wording and a Retroactive Date field; an occurrence form shows neither. If the retro date matches the policy inception, only injuries during that single policy year are eligible - a sign the program is brand new with no prior-acts coverage. If the retro date is blank, coverage applies to injuries any time before expiration, which is the broadest claims-made position the insured can hold.