11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates

Two Coverage Triggers, One Form Family

ISO publishes the CGL in two trigger versions. The Occurrence form (CG 00 01) responds to bodily injury or property damage that occurs during the policy period, no matter when the claim is eventually reported. The Claims-Made form (CG 00 02) responds to claims first made against the insured during the policy period (or any extended reporting period), provided the injury did not occur before the policy's Retroactive Date.

The distinction matters because liability claims often surface years after the event - a latent product defect, slow-developing pollution, or a construction defect discovered after a building settles. Which policy pays turns entirely on the trigger.

Occurrence Trigger: When Did the Injury Happen?

Under the occurrence form, the date of injury controls. If a 2022 policy was in force when the harm occurred, that 2022 policy pays even if the suit is filed in 2026 and the insured has since switched carriers. This produces a long tail of liability and is why occurrence reserves are difficult to estimate.

Worked example. A contractor installs faulty wiring in 2021. A fire from that wiring injures a tenant in 2026. Under an occurrence form, the policy in force in 2026 (when the injury occurred) responds - not the 2021 policy under which the work was done, because injury, not the negligent act, is the trigger.

Claims-Made Trigger: When Was the Claim Made?

The claims-made form pays only if both conditions are met:

1. The claim is first made during the policy period (or applicable reporting period), and
2. The injury or damage occurred on or after the Retroactive Date and before the end of the policy period.

The Retroactive Date is the earliest injury date the policy will recognize. Anything before it is excluded - this prevents an insured from buying a policy to cover already-known prior acts. Advancing (moving forward) the retro date on renewal creates a dangerous coverage gap, a favorite exam trap.

Comparing the Triggers

The Claims-Made Maturity and Premium Steps

A new claims-made policy is "first year" or immature: the retro date equals the inception date, so very little prior exposure is covered, and the premium is low. Each renewal the policy matures (Year 1, 2, 3) as the gap between retro date and present widens, and premium steps up. By roughly the fifth year the policy is "mature," charging close to occurrence-equivalent rates because it now embraces several years of potential claims.

Extended Reporting Periods (Tail Coverage)

When a claims-made policy is canceled or non-renewed, claims for past injuries can no longer be reported under it. Extended Reporting Periods (ERPs) preserve that ability:

• Basic (Mini) Tail - automatic, no premium. Provides a 60-day window to report claims for known/occurred losses, plus a 5-year window for claims arising from incidents the insurer was notified of before expiration.
• Supplemental (Full) Tail - purchased by written request within 60 days of termination, for additional premium. It provides an unlimited reporting period for injuries that occurred after the retro date but before policy end.

Trap: ERPs do not extend the policy period or provide new limits for new occurrences - they only extend the time to report claims for injuries that already fell within coverage. The supplemental tail reinstates the expiring aggregate limit but does not add coverage for events after expiration.

Laser and Prior-Acts Coverage

When an insured switches carriers, a new claims-made policy can be written with the same retro date as the expiring one to preserve continuity - this is sometimes called prior-acts or nose coverage, and it is the alternative to buying tail from the departing insurer. A laser is the opposite: the new insurer excludes a specific known prior loss or claimant by endorsement while covering everything else. Exam questions test whether students grasp that nose coverage (from the new carrier) and tail coverage (from the old carrier) are mirror-image solutions to the same gap problem.

Why Insurers Sell Both Forms

Occurrence coverage is simpler for the insured - report whenever the suit arrives - but it forces the insurer to hold reserves for decades, raising early-year premiums. Claims-made coverage lets the insurer close its books faster and offers lower entry premiums, which is why it dominates in long-tail lines such as medical malpractice, professional liability, and pollution. The CGL is most commonly written on the occurrence form, but contractors and manufacturers with heavy products exposure may be offered claims-made terms.

Quick Decision Rule for the Exam

• Question emphasizes when the injury happened -> Occurrence form.
• Question emphasizes when the claim was reported/made or mentions a retro date or tail -> Claims-made form.
• Question mentions switching carriers and preserving the old retro date -> nose / prior-acts coverage from the new insurer.