8.3 Occurrence vs. Claims-Made Triggers
Key Takeaways
- An occurrence form is triggered by the date injury/damage happens; a claims-made form is triggered by when the claim is first made.
- Claims-made policies require a retroactive date; injury before that date is excluded.
- Extended Reporting Periods (tail) protect insureds who switch or cancel claims-made coverage from late-reported claims.
- Any mention of a retroactive date signals a claims-made policy, since occurrence forms have none.
- Claims-made forms are common for professional liability and D&O; occurrence forms dominate general liability and auto.
The Coverage Trigger Problem
Liability claims often surface years after the wrongful act — think latent injury from a product or pollution. The coverage trigger decides which policy year responds. The ISO CGL CG 00 01 is written in two versions: an occurrence form and a claims-made form (CG 00 02). Knowing the difference is among the most heavily tested national topics.
Occurrence Form
An occurrence policy responds when the bodily injury or property damage takes place during the policy period, regardless of when the claim is reported. The date of the occurrence triggers coverage.
- Advantage: long-tail claims are covered by the policy in force when injury happened, even if reported decades later.
- Risk to insurer: "long tail" — open exposure for many years, harder to reserve.
Claims-Made Form
A claims-made policy responds only when the claim is first made against the insured during the policy period (or extended reporting period), and the injury occurred on or after the retroactive date.
Key features unique to claims-made:
| Feature | Function |
|---|---|
| Retroactive date | Earliest injury date that can be covered; injury before it is excluded |
| Laser / advancing retro date | Retro date that moves forward, narrowing coverage — a trap for insureds |
| Extended Reporting Period (ERP / tail) | Allows reporting claims after the policy ends for prior covered events |
| Basic ERP | Automatic, limited (e.g., 60-day claim-reporting + 5-year for known events) |
| Supplemental ERP | Purchased "tail," often unlimited duration |
Comparing the Triggers
| Factor | Occurrence | Claims-Made |
|---|---|---|
| Trigger | Injury during policy period | Claim made during policy period |
| Retroactive date | None | Required |
| Tail / ERP | Not needed | Critical when switching/canceling |
| Typical lines | General liability, auto | Professional liability, D&O, pollution |
| Early-year premium | Higher | Lower (rises toward "mature" year 5) |
Worked Example — Which Policy Pays?
A contractor installs a product in 2022. The defect causes injury in 2024. The claimant sues in 2026.
- Occurrence form: the 2024 policy responds — the year the bodily injury occurred.
- Claims-made form (retro date 1/1/2021): the 2026 policy responds — the year the claim was made — because the 2024 injury is after the retro date. Had the retro date been 1/1/2025, the injury would predate it and the claim would be excluded.
Common Traps
- A claims-made insured who switches carriers or retires without buying tail coverage has a gap — late-reported claims fall through.
- An advancing (laser) retroactive date can quietly strip coverage for older exposures.
- Occurrence forms have no retro date — if a question mentions a retroactive date, the policy must be claims-made.
Why the Trigger Matters: Long-Tail Claims
The trigger problem exists because some injuries surface years after the negligent act — asbestos, pollution, professional errors, construction defects. Whether a policy responds depends on which event it ties coverage to: when the injury happened (occurrence) or when the claim was made (claims-made). On the exam, the longer the gap between act and claim, the more the trigger choice changes the answer.
Occurrence Trigger — Precise Definition
An occurrence policy covers injury or damage that takes place during the policy period, no matter how many years later the claim is filed. The insured can let the policy lapse and still be covered for a claim arising from an act during a year the policy was in force. Its weakness is stacking and inflation guessing — the insurer must reserve for decades, and limits reflect old dollars.
Claims-Made Trigger and Its Three Dates
A claims-made policy covers a claim first made during the policy period (or extended reporting period), but only for acts on or after the retroactive date. Three dates control coverage: the retroactive date (earliest covered act), the policy period (claim must be reported in it or an ERP), and any extended reporting period (tail). A claim is covered only if the act occurred after the retro date and the claim is reported during the policy period or tail.
Worked Example — Which Policy Pays?
An error occurs in 2023. The professional has a claims-made policy with a 2020 retroactive date running through 2026. The injured client sues in 2025.
- Act (2023) is after the retro date (2020): yes.
- Claim made (2025) is within the policy period (through 2026): yes.
- Result: covered. Had the retro date been 2024, the 2023 act would predate it and the claim would be excluded despite being timely reported.
Common Traps
Switching from claims-made to occurrence (or changing insurers) can leave a gap for claims not yet made on past acts; the fix is prior-acts/nose coverage or a tail (ERP). A claims-made policy with no retro date effectively covers prior acts; advancing the retro date erodes coverage. Reporting a claim after the policy and tail expire defeats coverage even if the act was covered.
Nose Coverage and Laser Endorsements
Two more devices appear on trigger questions. Prior-acts (nose) coverage is bought from a new claims-made insurer to cover claims arising from acts before the new policy began but after the old retro date — the mirror image of a tail bought from the expiring insurer. A laser (specific-claim) exclusion carves a known exposure out of an otherwise broad retro date. Together, nose, tail, and laser endorsements explain how an insured moving between claims-made carriers avoids or creates gaps.
A Second Worked Timeline
A consultant's error occurs in 2022. She holds an occurrence policy in 2022, then switches to claims-made in 2024 with a 2024 retro date. A client sues in 2025. The claims-made policy excludes the 2022 act (before its 2024 retro date), but the 2022 occurrence policy responds because the injury occurred while it was in force — occurrence coverage survives the policy's expiration. The lesson: an act committed under an occurrence policy stays covered forever, while a claims-made policy reaches back only to its retro date.
A wrongful act occurs in 2023 but the claim is not filed until 2027. Under an occurrence-based CGL policy, which policy year responds?
An insured cancels a claims-made policy and retires without purchasing any tail coverage. What is the primary risk?