Occurrence vs. Claims-Made CGL and Retroactive Dates
Key Takeaways
- Occurrence CGL (CG 00 01) triggers on the date the injury occurs; claims-made CGL (CG 00 02) triggers on the date the claim is first made.
- On claims-made forms, the retroactive date is the earliest injury date covered; injury before the retro date is excluded even if reported on time.
- A retroactive date should never be advanced at renewal, as that creates a coverage gap.
- The basic ERP is automatic and short; the supplemental ERP (tail) is purchased, gives an unlimited reporting window, and does not reinstate limits.
- Claims-made premiums step up over roughly five years until 'mature,' while occurrence premiums are higher early but more stable.
Two CGL Coverage Triggers
ISO publishes the CGL in two trigger versions: the occurrence form (CG 00 01) and the claims-made form (CG 00 02). The trigger determines which policy year must respond to a loss. This is one of the densest topics on the national exam because it combines retroactive dates, extended reporting periods, and laddering of multiple policies.
- Occurrence trigger: coverage applies if the bodily injury or property damage occurs during the policy period, no matter when the claim is finally made - even years later. The policy in force when the harm happened responds.
- Claims-made trigger: coverage applies if the claim is first made against the insured during the policy period (or any applicable extended reporting period), and the injury occurred on or after the retroactive date.
Why Claims-Made Exists
Long-tail exposures - latent disease, construction defects, environmental harm - can surface decades after the act. Under occurrence coverage that creates the "long tail" problem: an insurer must hold reserves and remain on the hook for losses that manifest far in the future, making pricing difficult. Claims-made coverage caps the insurer's exposure to claims actually reported during the policy term, letting the insurer reserve more accurately. That is why claims-made dominates professional liability, D&O, and pollution lines, while occurrence remains the norm for everyday premises/operations CGL.
The Retroactive Date Is the Pivot Point
On a claims-made policy, the retroactive date is the earliest date an injury-causing event can occur and still be covered. Injury arising before the retro date is excluded even if the claim is reported during the policy period. Three rules tested heavily:
- A retro date should never be advanced (moved forward) at renewal - doing so creates a coverage gap for the in-between period.
- "Full prior acts" coverage means there is no retroactive date - any past act is covered if first reported now.
- Switching from one claims-made carrier to another usually requires matching the prior retro date or buying tail coverage to avoid a gap.
ERP: Basic vs. Supplemental Tail
When a claims-made policy ends, the Extended Reporting Period (ERP), or "tail," lets the insured report claims after expiration for injuries that occurred during coverage.
| Tail | Trigger | Duration | Cost |
|---|---|---|---|
| Basic (mini) tail - reporting | Automatic on cancellation/nonrenewal | 60 days for claims, 5 years for known incidents reported | Free |
| Supplemental (full) tail | Must request, usually within 60 days | Unlimited reporting period | Up to ~200% of last annual premium |
The supplemental ERP is a one-time premium and is non-cancelable once purchased. It does NOT reinstate limits - it merely extends the reporting window using the limits that remained at expiration.
Reading a Claims-Made Timeline and the Tail
The occurrence/claims-made distinction decides which policy year answers for a claim.
| Trigger | Policy responds when |
|---|---|
| Occurrence | The injury/damage happens during the policy period (regardless of when claimed) |
| Claims-made | The claim is first made during the policy period (for an event after the retroactive date) |
Exam trap: Under claims-made, an injury that occurred during the policy period but is reported years later is covered only if a policy is in force when the claim is made and the event postdates the retroactive date. The occurrence form has no such reporting requirement.
Retroactive Date and Extended Reporting Periods
The retroactive date bars coverage for events before it - advancing it forward creates a gap. When claims-made coverage ends (retirement, switching to occurrence), an Extended Reporting Period (tail) preserves coverage for claims reported after expiration. The Basic ERP is automatic and short (e.g., 60 days to report, plus a 5-year window for claims from events already reported); a Supplemental ERP is purchased for an unlimited reporting window. Maturing premiums (claims-made priced lower in year one, rising toward "mature" by year five) is another reliable exam point.
A consultant carries a claims-made CGL with a retroactive date of 1/1/2024. A negligent act causing property damage occurred on 6/1/2023. A claim for that damage is first made against the insured on 3/1/2026, while the policy is in force. Is the claim covered?
Laddering: Which Policy Pays?
When an insured has held several policies, you must ladder them. Worked example:
- Occurrence policy A covered 2020; injury occurred in 2020; claim made 2025. Policy A (2020) pays - occurrence trigger looks to when the injury happened.
- Claims-made policy B in force 2025 with retro date 2018; injury occurred 2020; claim first made 2025. Policy B pays - claims-made looks to when the claim is made, and 2020 is after the 2018 retro date.
Note the danger of running occurrence and claims-made back-to-back without matching dates: a gap or an overlap can leave the insured arguing with two carriers.
Quick Comparison
- Occurrence: trigger = injury date; no retro date; no tail needed; premiums stable but higher early; risk of stacking old policies.
- Claims-made: trigger = report date; has retro date and ERP; premiums step up over the first ~5 years as the "maturity" risk grows; gaps possible when switching carriers.
- First-year claims-made is cheapest because little prior exposure is yet reportable; by the 5th year ("mature") it approximates occurrence pricing.
- Buying tail (supplemental ERP) protects an insured who retires, sells the business, or moves to an occurrence policy.
An insured is moving from a claims-made CGL to a new occurrence CGL and will not renew the claims-made policy. To avoid a coverage gap for acts committed during the claims-made years but not yet reported, the insured should: