Occurrence vs. Claims-Made CGL and Retroactive Dates

Occurrence vs. Claims-Made CGL and Retroactive Dates

ISO publishes the CGL in two coverage triggers: the Occurrence form (CG 00 01) and the Claims-Made form (CG 00 02). The trigger determines which policy responds to a loss, and it is one of the most frequently misunderstood — and therefore heavily tested — concepts on the licensing exam.

An occurrence policy covers bodily injury or property damage that occurs during the policy period, no matter when the claim is reported — even years after the policy expired. A claims-made policy covers claims first made against the insured during the policy period (and reported during the period or any applicable extension), provided the injury occurred on or after the retroactive date.

The Two Triggers Side by Side

Occurrence forms create long-tail liability for insurers — a 2026 occurrence could generate a claim in 2040. Claims-made was developed to match premium to the period in which claims actually arrive, which is why latent-injury exposures (asbestos, pollution, professional malpractice) often use it.

The Retroactive Date

The retroactive date is the linchpin of claims-made coverage. A claims-made policy covers a claim only if the injury or damage occurred on or after the retroactive date AND the claim is first made during the policy period. Injury that occurred before the retroactive date is excluded, even if the claim arrives during an active policy.

When an insured renews continuously with the same insurer, the retroactive date typically stays fixed at the date coverage first incepted, so the "window" of covered prior acts grows each year. If an insured switches insurers and the new carrier sets a later retroactive date, a coverage gap opens for injuries between the old and new dates — a classic exam trap.

The Five Claims-Made Maturity Steps and ERPs

ISO claims-made policies progress through a five-year maturation. In Year 1 (first-year/"first step"), the retroactive date equals the inception date, so only current-period injuries are covered. Each subsequent step extends the prior-acts window. A mature claims-made policy (5+ years) behaves nearly like occurrence coverage for ongoing operations.

When claims-made coverage ends or the retroactive date is advanced, the insured needs an Extended Reporting Period (ERP), or "tail":

• Basic Tail (Basic ERP): Automatic, no extra charge. Provides a 60-day tail to report claims for known losses, plus a 5-year tail for claims arising from incidents reported to the insurer during the policy period.
• Supplemental Tail (Supplemental ERP): Optional, purchased for additional premium, with unlimited time to report claims for covered pre-cancellation occurrences. Must usually be requested within 60 days of policy termination.

Occurrence CGL Versus Claims-Made CGL

The CGL is sold in two trigger versions. The occurrence form responds to bodily injury or property damage that takes place during the policy period, regardless of when the claim is reported, which suits most premises and operations risks. The claims-made form responds to claims first made during the policy period for injury occurring on or after the retroactive date, and is used for long-tail or hard-to-reserve exposures. The forms are otherwise nearly identical; only the trigger and the claims-made supplemental provisions differ.

Retroactive Date and the Five Extended Reporting Tails

A claims-made CGL's retroactive date is the bright line: injuries before it are never covered, even if the claim arrives during the policy period. ISO provides a basic extended reporting period automatically, with two tails, a 60-day "midnight" tail for claims from known occurrences and a five-year tail for occurrences reported within 60 days, plus a supplemental ERP purchasable for unlimited duration by endorsement after termination. These tails prevent gaps when a claims-made policy ends.

Laser Dates, Maturity, and Premium

Claims-made coverage "matures" over time; first-year (immature) policies cost less because the window of covered, reported claims is short, while mature (fifth-year and later) policies cost the most and approximate occurrence pricing. An insurer may advance the retroactive date or apply a "laser" to exclude a specific known exposure. Candidates should recognize that advancing the retroactive date narrows coverage and that an insured facing such a change usually needs supplemental tail coverage to stay protected.

Worked Scenario: The Switching Gap

Dr. Patel's claims-made professional CGL with Insurer A had a retroactive date of 1/1/2018. On 1/1/2026 she switches to Insurer B, which sets a new retroactive date of 1/1/2026 and offers no prior-acts coverage. In April 2026 a patient sues over an incident from 2021.

• Insurer B denies: the 2021 injury predates B's 1/1/2026 retroactive date.
• Insurer A denies: the claim was made in 2026, after A's policy ended, and no tail was purchased.

Result: an uncovered gap. The fix would have been either nose coverage (B agrees to the 1/1/2018 retroactive date / prior-acts coverage) or purchasing a Supplemental ERP (tail) from A. Exam questions love this fact pattern — recognize that the cure is matching retroactive dates or buying a tail.