11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates
Key Takeaways
- An occurrence policy covers injury or damage that happens during the policy period regardless of when the claim is reported.
- A claims-made policy covers claims first made during the policy period, subject to a retroactive date.
- The Retroactive Date excludes injury or damage occurring before it, controlling the claims-made trigger.
- Coverage A, B, and C trigger dates are tracked on the claims-made form (CG 00 02) through the Extended Reporting Periods.
- Basic and Supplemental Extended Reporting Periods (tail coverage) protect against gaps when claims-made coverage ends.
Two trigger philosophies
The Insurance Services Office (ISO) publishes two CGL forms with different triggers:
- Commercial General Liability Coverage Form - Occurrence (CG 00 01) responds when bodily injury or property damage occurs during the policy period, no matter how many years later the claim is reported.
- Commercial General Liability Coverage Form - Claims-Made (CG 00 02) responds when a claim is first made against the insured during the policy period (or an extended reporting period), provided the injury occurred on or after the retroactive date.
The difference matters most for long-tail exposures such as construction defect, pollution, and products, where harm may surface years after the work.
The occurrence trigger
Under an occurrence form, the date of loss is what matters. If injury happens in 2026, the 2026 policy responds even if the lawsuit arrives in 2031. This is simple but exposes the insurer to claims long after a policy expires, which is why claims-made forms exist for volatile lines.
| Question to ask | Occurrence form answer |
|---|---|
| What triggers coverage? | When the injury or damage happened |
| Does report date matter? | No |
| Main risk to insurer | Late-reported (long-tail) claims |
The claims-made trigger and the retroactive date
A claims-made policy responds only if both conditions are met:
- The claim is first made against the insured during the policy period or an Extended Reporting Period; and
- The injury or damage occurred on or after the Retroactive Date shown in the declarations.
The Retroactive Date is the cutoff. Any bodily injury or property damage that occurred before it is excluded, even if the claim is made during the current period. Insurers set the retroactive date at the first claims-made policy inception and try to keep it unchanged across renewals so prior years stay covered.
Worked timeline: claims-made
Retroactive Date = January 1, 2024. Policy period = January 1, 2026 to January 1, 2027.
- Injury occurs March 2025, claim made June 2026: Covered. Injury is after the retro date; claim is made during the period.
- Injury occurs October 2023, claim made June 2026: Not covered. Injury predates the January 1, 2024 retro date.
- Injury occurs March 2025, claim made February 2027: Not covered by the base policy, because the claim was made after expiration, unless an Extended Reporting Period applies.
This third scenario is exactly the gap that tail coverage solves.
A claims-made CGL has a Retroactive Date of 1/1/2024 and a policy period of 1/1/2026 to 1/1/2027. A claim is made on 6/1/2026 for property damage that occurred on 9/1/2023. Is the claim covered?
Extended Reporting Periods (tail coverage)
When claims-made coverage ends or its retroactive date is advanced, claims reported afterward can fall through the cracks. Extended Reporting Periods (ERPs) close the gap:
- Basic Extended Reporting Period: Automatic and free. It typically provides a short window (commonly 60 days) for claims first made after expiration, plus a longer window (commonly 5 years) for occurrences already reported as potential claims before the policy ended.
- Supplemental Extended Reporting Period: Optional, must be purchased (usually within 60 days of expiration), and provides an unlimited time window for claims arising from injury between the retro date and the end of the policy.
| Feature | Basic ERP | Supplemental ERP |
|---|---|---|
| Cost | Free, automatic | Extra premium, requested |
| Length | Short (e.g., 60 days / 5 years) | Unlimited |
| Trigger to buy | None | Request within 60 days |
An insured is moving from a claims-made CGL to an occurrence CGL with a different insurer and worries that a future claim for past work will not be reported before the old policy expires. Which feature best protects against that gap?
Tracking the Retroactive Date on CG 00 02
The CGL is sold in two trigger versions: the occurrence form (CG 00 01) and the claims-made form (CG 00 02). On the claims-made form, two dates must both be satisfied for coverage: the injury must occur on or after the retroactive date, and the claim must be first made during the policy period (or an extended reporting period).
The retroactive date is the control valve. Moving it back covers older prior acts; advancing it narrows coverage. When an insured switches from occurrence to claims-made, or changes claims-made carriers, the retro date must be preserved or prior-acts (nose) coverage purchased - otherwise events between the old and new retro dates fall into an uninsured gap.
Basic and Supplemental Extended Reporting Periods
When a claims-made CGL is cancelled or not renewed, Extended Reporting Periods (ERPs) allow later claims for events that occurred on or after the retro date and before termination:
| ERP | How Obtained | Duration |
|---|---|---|
| Basic (mini-tail) - reporting | Automatic, no charge | Short window (e.g., 60 days) to report claims already made |
| Basic (mini-tail) - discovery | Automatic, no charge | Up to 5 years for claims arising from reported occurrences |
| Supplemental (full tail) | Purchased within 60 days | Unlimited duration |
The practical exam pattern: an insured who closes a business or switches to occurrence coverage buys the Supplemental ERP to protect against long-tail claims that surface years later. Without it, a claim made after the basic mini-tail expires is uninsured even though the event occurred during the covered years.
A business lets its claims-made CGL lapse and buys an occurrence policy elsewhere with no prior-acts coverage. A claim is later made for an event during the old claims-made years, after the basic ERP expired. What protects the insured?
A Year-by-Year View of a Maturing Claims-Made Program
A claims-made program is said to mature over roughly five years, and the premium reflects the widening gap between the retroactive date and the current policy expiration. In year one, the retro date and the policy inception are the same, so only injuries occurring during that single year can generate covered claims - the exposure is small and the premium is lowest (the first-year (1st step) rate).
Each successive year, the policy must respond to claims arising from injuries in all prior years back to the retro date, so the exposure - and the step factor in the rate - grows until it reaches the mature (occurrence-equivalent) level around year five.
This maturation explains a recurring exam pattern: a claims-made policy in its fifth year costs nearly as much as an occurrence policy because it now covers almost the same span of prior injury, while a first-year claims-made policy is markedly cheaper than occurrence coverage. Preserving the original retro date across renewals is essential; resetting it to a later date would strip away coverage for the prior years the insured has already paid step increases to cover.