8.3 Occurrence vs. Claims-Made Triggers
Key Takeaways
- Occurrence policies are triggered by when the injury occurs; claims-made by when the claim is first made.
- An occurrence policy provides long-tail protection — the policy in force at injury pays even years later.
- Claims-made requires both an in-period claim and an injury on or after the retroactive date.
- Advancing the retroactive date shrinks coverage; tail (supplemental ERP) coverage fills the post-expiration reporting gap.
- Claims-made starts cheaper and matures over ~5 years; lapsing without a tail creates an uninsured gap.
The coverage trigger decides which policy year answers a liability claim. The ISO CGL is sold on two trigger bases — occurrence (CG 00 01) and claims-made (CG 00 02) — and the distinction is one of the most heavily tested commercial-lines concepts.
Occurrence Trigger
An occurrence policy responds to bodily injury or property damage that happens during the policy period, no matter when the claim is filed. The policy in force when the injury occurred pays — even if the lawsuit arrives years after the policy expired.
- Trigger: date the injury/damage occurs.
- Advantage: long-tail protection; latent injuries (asbestos, toxic exposure) stay covered by the old policy.
- Limit applied: the aggregate of the policy year in which the injury occurred (a concern if that year's aggregate is already eroded).
Claims-Made Trigger
A claims-made policy responds only when the claim is first made against the insured during the policy period (or an extended reporting period), and the injury occurred on or after the retroactive date. Two conditions must both be met: claim made in-period and injury after the retro date.
- Trigger: date the claim is first made.
- Retroactive (retro) date: the earliest injury date the policy will cover; injuries before it are excluded.
- Common use: professional liability/E&O and CGL for long-tail exposures.
The Retroactive Date and Tail Coverage
The retroactive date is the linchpin of claims-made. Advancing it (a later date) shrinks coverage and is a red flag for the insured. When a claims-made policy is cancelled or replaced, gaps open unless the insured buys reporting tails:
| Term | What it does | Who triggers it |
|---|---|---|
| Basic ERP (mini-tail) | Automatic ~60 days to report claims after expiration | Built in, no charge |
| Supplemental ERP (full tail) | Purchased extension (often unlimited) to report later claims for pre-expiration injuries | Insured buys; the exam's key tail concept |
| Prior acts / nose coverage | New insurer agrees to cover acts before its inception | New carrier offers |
Worked Trigger Example
An injury occurs in 2023. The claim is first filed in 2026. The insured had an occurrence policy in 2023 and a claims-made policy (retro date 2024) in 2026.
- The 2023 occurrence policy responds — injury happened during its term.
- The 2026 claims-made policy does not — although the claim was made in-period, the 2023 injury predates its 2024 retro date.
If the insured had carried claims-made continuously since 2022 with a 2022 retro date, the 2026 policy (claim first made in 2026, injury after retro) would respond.
Why Claims-Made Costs Less Early
Claims-made policies are usually cheaper in their first ('step 1') years and mature over about five years toward occurrence-equivalent pricing, because early on few prior-year injuries can yet be reported. Switching from claims-made to occurrence — or letting claims-made lapse without a tail — is the classic way insureds create an uninsured gap.
Side-by-Side Comparison
Memorize this table — it answers most trigger questions directly:
| Feature | Occurrence (CG 00 01) | Claims-made (CG 00 02) |
|---|---|---|
| Trigger | Injury occurs during term | Claim first made during term |
| Retroactive date | Not used | Critical; injury must follow it |
| Late-reported claims | Always covered by injury-year policy | Need an extended reporting period |
| Long-tail (latent) risk | Handled cleanly | Risk of gaps on switch/lapse |
| Early-year cost | Higher, level | Lower, steps up over ~5 years |
| Best fit | Premises, products, general operations | Professional / E&O, evolving exposures |
Stacking Limits and the 'Which Aggregate' Trap
Under an occurrence form, a long-latency claim (asbestos exposure over many years) can implicate multiple policy years, raising questions of which year's limit responds; jurisdictions use triggers such as exposure, manifestation, or continuous-trigger theories. Under claims-made, by contrast, the single policy in force when the claim is made supplies the limit, which makes claims-made limits easier to track but exposes the insured to gaps. The exam usually keeps this simple: occurrence = injury-year limit; claims-made = claim-year limit subject to the retro date.
A Practical Producer Checklist
When moving a client between carriers on a claims-made program, confirm: (1) the retro date carries forward (never let it advance), (2) prior-acts/nose coverage is offered by the incoming carrier, and (3) if the program is ending entirely (retirement, sale of the business), a supplemental tail is purchased so claims reported later for past work are still covered.
- Never let the retroactive date advance — it silently strips years of coverage.
- A short basic ERP is automatic; a long supplemental ERP must be bought, usually within a set window after expiration.
- Document the trigger basis on the proposal — E&O suits against producers frequently allege a failed claims-made-to-occurrence transition.
Getting these three steps right is the single most valuable claims-made skill, both on the exam and in practice, because a mishandled transition turns into an uninsured loss that often lands back on the producer as an E&O claim.
An injury occurs in 2022 but the lawsuit is not filed until 2027. The insured held an occurrence CGL in 2022 and a claims-made CGL (retro date 2025) in 2027. Which policy responds?
An insured replacing a claims-made policy wants to keep coverage for claims reported after the policy expires for injuries that occurred during the policy term. The insured should purchase: