11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates

A Carson City plumbing subcontractor finishes a hotel remodel in March. Water damage appears in August, but the owner does not sue until two years later. Which policy pays? The answer depends entirely on whether the Commercial General Liability form is occurrence or claims-made — a distinction that appears repeatedly on the national casualty portion of the Nevada Property & Casualty licensing exam and drives real-world errors-and-omissions claims when producers mishandle renewals.

Two ISO Forms, One Coverage Skeleton

ISO publishes the CGL in two editions that share the same insuring agreements, exclusions, and limit structure:

Everything you learned about aggregates and sublimits applies to both. Only the trigger changes — and that change dominates tail coverage, renewal pricing, and gap analysis.

Occurrence Trigger: When the Harm Happens

An occurrence policy covers bodily injury or property damage that takes place during the policy period, no matter when the resulting claim is filed or suit is served.

• Injury on June 1, 2024 during the 2024–2025 policy → that policy responds even if suit is filed in 2028.
• No retroactive date applies because eligibility is anchored to the date of injury, not the date of reporting.
• No Extended Reporting Period (tail) is required when the policy expires — the occurrence trigger already locked coverage to the policy year in force when harm happened.

Best for: sudden injuries, slip-and-falls, auto-adjacent premises claims, and any exposure where the injury date is easy to identify even if discovery is delayed.

Insurer concern: long-tail latent injury (asbestos, slow water intrusion) can produce claims decades after the policy expired, making loss reserving difficult.

Claims-Made Trigger: When the Claim Arrives

A claims-made policy pays only if both conditions are satisfied:

1. The claim is first made against the insured during the policy period or a valid Extended Reporting Period (ERP), and
2. The bodily injury or property damage occurred on or after the retroactive date and before the end of the policy period (or during an ERP for pre-expiration injuries).

Fail either test → no coverage, even if the loss would have been covered under an occurrence form.

Best for: professional and product-liability programs where insurers want claims reported while the policy is active (or during purchased tail), improving reserving accuracy.

The Retroactive Date — Hard Floor on Loss Dates

The retroactive date (retro date) printed on the declarations is the earliest date of injury or damage the claims-made policy will cover. Injury or damage that occurs before the retro date is excluded even if the claim is reported during the current policy period.

Common retro date patterns:

• Full prior acts — retro date equals the first date the insured bought continuous claims-made coverage (best for the insured).
• Inception retro — retro date equals the current policy inception (worst for the insured; only new injuries after that date count).

Trap: Advancing the Retroactive Date

On renewal, an insurer may try to move the retro date forward to the renewal effective date. That creates a coverage gap for injuries that happened after the old retro date but before the new one. ISO rules generally require the insurer to offer a Supplemental ERP when it advances the retro date or nonrenews a mature claims-made policy, giving the insured a chance to buy tail for the abandoned window.

Nevada scenario: A medical spa buys claims-made CGL effective 1/1/2022 with retro date 1/1/2022. A latent skin-injury occurs 11/15/2023. Claim is reported 4/1/2026 during the 2026–2027 policy → covered (injury after retro date, claim during period). If the injury occurred 10/1/2021 instead, same reporting date → not covered (before retro date).

Extended Reporting Periods: BERP and Supplemental Tail

When a claims-made policy ends, the insured may still need to report claims for injuries that happened before expiration but were not yet made as claims. Extended Reporting Period (ERP) endorsements — commonly called tail coverage — extend the time to report those claims.

Basic Extended Reporting Period (BERP)

The Basic ERP is automatic and no additional premium in the standard ISO form:

• Typically 60 days after policy expiration to report any claim for injury that occurred before expiration.
• An additional mini-tail (often up to five years in standard language) may apply to claims arising from occurrences you reported to the insurer during the policy period — the "notice of circumstance" protection.

BERP is a safety net, not a multi-year solution. It helps an insured who barely missed reporting at expiration; it does not replace strategic tail planning when changing carriers.

Supplemental Extended Reporting Period

The Supplemental ERP must be requested and purchased (additional premium). In the standard ISO claims-made form it can provide unlimited duration for reporting eligible pre-expiration injuries, subject to the retro date and other policy terms.

Buy Supplemental ERP when:

• Switching from claims-made to occurrence (new occurrence policy will not pick up old unreported injuries).
• Changing carriers on claims-made (the new insurer's retro date may not cover old injury dates).
• Retiring or selling a business with long-tail exposure.
• Insurer nonrenews or advances the retro date.

ISO requires the insurer to offer the Supplemental ERP within a stated number of days after cancellation or nonrenewal — exam items sometimes test whether the producer remembered to trigger that offer for the client.

Worked Timeline: Four Date Tests

Policy: claims-made CGL, retro date 1/1/2023, period 1/1/2026 – 1/1/2027, no tail purchased.

Policy Maturity and Premium Creep

A new claims-made policy is immature: only injuries after the recent retro date can ever be reported, so the insurer's exposure starts small. Each renewal adds another year of eligible prior acts that may be reported during the new term, so the policy matures over roughly five years until premium approaches occurrence-form levels.

Producer takeaway: First-year claims-made premium is not a long-term bargain if the client will eventually need Supplemental ERP at retirement or carrier change. Budget tail costs at inception, not at exit.

Switching Forms and Coverage Gaps

The most dangerous transitions:

Occurrence → occurrence with a new carrier is usually lower risk for injury-date gaps because the trigger remains the date of harm. Claims-made → anything demands a date chart.

Notice of Circumstance

Claims-made forms allow the insured to report circumstances that may give rise to a claim — a specific incident or trend — during the policy period even before a demand or lawsuit arrives. If a claim later arises from that noticed circumstance, it is treated as first made during the reporting policy period.

This provision protects an insured who senses litigation brewing as a policy year ends. Producers should train clients to report incidents, not only lawsuits.

Side-by-Side Exam Summary

Five-Step Checklist for Every Claims-Made Question

1. Injury date on or after retro date?
2. Injury before policy expiration (or during ERP for pre-expiration injury)?
3. Claim first made during policy period or valid ERP?
4. If reporting after expiration, is BERP or Supplemental ERP in force?
5. Is the loss otherwise covered (no exclusion)?

A "no" on any of the first four usually defeats coverage. National exam writers love fact patterns that pass three tests and fail one — especially retro date and post-expiration reporting.

Memory anchors: occurrence = when harm happens · claims-made = when claim arrives · retro date is a floor · BERP is short and free · Supplemental ERP is purchased tail · never change claims-made without a date diagram.