8.3 Occurrence vs. Claims-Made Triggers
Key Takeaways
- An occurrence policy covers injury or damage that takes place 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 that occurred before that date, even if the claim is reported during the policy period.
- Extended Reporting Periods (tail coverage) let a claims-made insured report later claims for prior covered events.
- Claims-made forms commonly mature over five years, raising the per-occurrence trigger value as the gap between retro date and expiration widens.
Two ways a liability policy is triggered
The ISO Commercial General Liability form comes in two versions: occurrence (CG 00 01) and claims-made (CG 00 02). The version determines which event in time "triggers" coverage. This is one of the most heavily tested liability topics.
- Occurrence trigger — coverage applies if the bodily injury or property damage takes place during the policy period, no matter when the claim is later reported.
- Claims-made trigger — coverage applies if the claim is first made against the insured during the policy period (and after the retroactive date), no matter when the injury occurred.
The retroactive date and the reporting trigger
A claims-made policy carries a retroactive date. Injury or damage that occurs before the retroactive date is not covered, even if the claim is reported during the active policy period. The retroactive date prevents an insured from buying coverage today for losses that already happened years ago.
| Feature | Occurrence | Claims-made |
|---|---|---|
| Trigger event | Injury occurs in policy period | Claim first made in policy period |
| Retroactive date | Not used | Required; bars earlier injury |
| Late-reported old loss | Covered if it occurred in-period | Covered only if claim made in-period |
| Premium pattern | Higher, stable | Lower early, "matures" over ~5 years |
Worked timing scenarios
Scenario A (occurrence): A product injures a user on June 1, 2024, but the user does not sue until August 2027. The 2024 occurrence policy responds because the injury took place in its period, regardless of the 2027 report.
Scenario B (claims-made): A claims-made policy runs Jan 1, 2026 to Jan 1, 2027 with a retroactive date of Jan 1, 2024. Injury occurred March 2025; claim first made September 2026. Covered — injury is after the retro date and the claim was made in-period.
Scenario C (claims-made, barred): Same policy, but injury occurred in December 2023, before the retro date. Not covered, even though the claim is made during the 2026 period, because the injury predates the retroactive date.
Extended Reporting Periods (tail coverage)
When a claims-made policy is canceled or not renewed, claims reported afterward could fall through a gap. Extended Reporting Periods (ERPs), called tail coverage, let the insured report later claims for events that occurred after the retro date but during prior coverage.
- Basic ERP (mini-tail) — automatic, no extra charge; a short window (commonly 60 days to report and 5 years for claims arising from late-reported occurrences).
- Supplemental ERP (full tail) — must be purchased, no fixed end date, restores reporting for covered prior events.
Claims-made forms are said to mature: as the gap between the retroactive date and expiration widens (first-year, second-year, mature after about 5 years), the rate climbs toward occurrence pricing because more potential injury dates are exposed.
A claims-made CGL runs Jan 1, 2026 to Jan 1, 2027 with a retroactive date of Jan 1, 2024. The injury occurred in December 2023, and the claim was first made in September 2026. Is the claim covered?
Bodily injury occurs in June 2024 but the lawsuit is not filed until August 2027. Which policy responds under an occurrence form?
Occurrence vs. Claims-Made Triggers
The coverage trigger decides which policy year responds, and the difference is one of the most-tested liability concepts:
| Feature | Occurrence Form | Claims-Made Form |
|---|---|---|
| What triggers coverage | Injury/damage happens during the period | Claim is first made during the period |
| Reporting timing | Claim can arrive years later | Claim must be made (and reported) in the period |
| Retroactive date | Not used | Excludes events before the retro date |
| Long-tail exposure | Insurer keeps responsibility for old years | Manageable; each year stands alone |
Claims-made forms exist to control long-tail exposures (pollution, professional liability) where injury may surface years after the act. The retroactive date is the floor: an injury that occurred before it is not covered even if the claim arrives during the policy period.
Retroactive Dates and Tail Coverage
When a claims-made policy ends, a gap can open between the last day of coverage and a claim that arrives later for an event that already occurred. Extended Reporting Periods (ERPs), or tail coverage, close that gap:
- Basic ERP (mini-tail) - automatic, short window (often 60 days to report, up to 5 years to discover) at no extra charge.
- Supplemental ERP (full tail) - purchased, can be unlimited in duration, reports later claims for events that happened on or after the retro date and before the policy ended.
A claims-made policy is said to mature over roughly five years: as the gap between the retro date and the current period widens, more prior years are exposed, so the premium rises each year until maturity. When switching insurers, an insured either buys tail from the old carrier or nose (prior acts) coverage from the new one to avoid an uninsured gap.
A claims-made CGL has a retroactive date of January 1, 2024. An injury occurs on December 1, 2023, but the claim is first made on March 1, 2026, while the policy is in force. Is the claim covered?
Choosing Between the Two Triggers
The choice of trigger is driven by the tail of the exposure. Short-tail risks, where injury and claim arrive close together (a slip-and-fall at a store), are well served by occurrence coverage because the responsible policy year is easy to identify and there is little risk of a surprise decades later. Long-tail risks, where harm surfaces years after the act (professional malpractice, pollution, products), favor claims-made coverage because the insurer can reserve and price each year based on claims actually reported, rather than carrying open-ended liability for old policy years.
For the insured, the trade-off is administrative: an occurrence policy needs no tail when it ends, but a claims-made policy requires careful management of the retroactive date and, on termination, the purchase of tail coverage or prior-acts coverage from the next insurer. A coverage gap appears precisely when an insured drops claims-made coverage without arranging either, so the exam often tests the consequences of mishandling that transition.