11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates

Occurrence vs. Claims-Made CGL and Retroactive Dates

The CGL is sold in two coverage triggers: occurrence (ISO CG 00 01) and claims-made (ISO CG 00 02). The trigger answers a single question - what event activates coverage? On the national exam, expect several questions distinguishing the two, and at least one requiring you to apply a retroactive date to a fact pattern. Getting the trigger wrong is the classic way candidates lose points in the liability section.

Occurrence Trigger (CG 00 01)

An occurrence policy responds when the bodily injury or property damage takes place during the policy period, regardless of when the claim is reported - even years later. This is ideal for long-tail exposures (latent injury, construction defect) where harm may surface long after the work was done.

Key rule: the date of the injury or damage controls coverage, not the date the claim is filed. A 2026 occurrence policy responds to a lawsuit filed in 2031 if the injury happened in 2026.

Claims-Made Trigger (CG 00 02)

A claims-made policy responds only when the claim is first made against the insured during the policy period (or any extended reporting period), AND the injury occurred on or after the retroactive date. Two conditions must both be satisfied:

1. The claim is first made during the policy period.
2. The injury or damage took place on or after the retroactive date.

If either fails, there is no coverage. This trigger is common where it is hard to estimate ultimate losses, letting insurers reserve more accurately.

The Retroactive Date

The retroactive date is the dividing line: injuries occurring before it are never covered, no matter when the claim is made. A retro date is usually set to the first day a continuous claims-made program began. Pushing the retro date forward (toward today) narrows coverage; pulling it back (full prior acts) broadens it.

• Pre-retro injury = no coverage, even if the claim is made during the policy period.
• A maturing claims-made program may sit at 1st, 2nd, 3rd... year, with the retro date fixed at inception.

Worked Numeric: Applying the Retro Date

Claims-made policy in force 1/1/2026-1/1/2027, retroactive date 1/1/2024.

Note how the second row is denied purely on the retro date, even though the claim arrives squarely inside the policy period.

Extended Reporting Periods (Tail Coverage)

Because a claims-made policy needs the claim reported during the period, a gap arises when coverage ends. ISO provides two solutions:

• Basic Extended Reporting Period (BERP): automatic, no charge. A short tail (commonly 60 days to report claims, plus a 5-year window for claims arising from occurrences reported during the 60 days).
• Supplemental Extended Reporting Period (SERP): optional, purchased by endorsement, provides an unlimited reporting tail for claims from injuries before the cancellation/nonrenewal but on or after the retro date. It reinstates a fresh aggregate.

Switching Triggers and the Coverage Gap Trap

The biggest real-world (and exam) trap is moving from occurrence to claims-made, or letting a claims-made program lapse without buying a tail.

• Drop a claims-made policy with no tail: a claim reported the next day for a covered-period injury is uninsured.
• Switch occurrence-to-claims-made: set the retro date back to the start of the old coverage to avoid a gap.
• When choosing forms for long-tail liability, occurrence is generally safer for the insured because the report date is irrelevant.

Laser Endorsements and Reporting-Form Mechanics

Claims-made programs can be fine-tuned. A specific-claim (laser) exclusion carves out a known problem from coverage. The claims-made-and-reported wording (common on ISO CGL claims-made) requires the claim to be both made and reported within the period or the ERP - a late report forfeits coverage even when the claim arose during the term.

Trap: "Claims-made" and "claims-made-and-reported" are not identical - the latter can deny an in-period claim that was reported late. Read whether the form requires reporting, not just making, within the period.

Nose Coverage and the Switch-Carrier Trap

When an insured moves to a new claims-made carrier, two devices preserve continuity. Nose coverage (prior-acts) asks the new insurer to set the retro date to match the old policy's, so past exposures stay covered without a tail. Tail coverage (ERP) is bought from the expiring insurer to report late claims after that policy ends.

Trap: Letting a claims-made policy lapse without a tail and without matching the retro date on the new policy creates a coverage gap for old work - a claim reported the next day may be uninsured. Picture the timeline: nose before, tail after.