11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates

Occurrence vs. Claims-Made CGL

ISO publishes the CGL in two trigger formats: the Occurrence form (CG 00 01) and the Claims-Made form (CG 00 02). The coverage grants and exclusions are nearly identical; what differs is the coverage trigger - the event that determines which policy period responds to a loss. This is one of the most heavily tested CGL concepts on the national portion.

Under an occurrence policy, coverage is triggered when the bodily injury or property damage occurs during the policy period, regardless of when the claim is later filed. Under a claims-made policy, coverage is triggered when the claim is first made against the insured during the policy period (or extended reporting period), provided the injury occurred on or after the retroactive date.

The retroactive date and trigger logic

The Retroactive Date on a claims-made policy is the dividing line. For a claim to be covered, BOTH conditions must be true:

1. The injury or damage occurred on or after the retroactive date, AND
2. The claim was first made during the policy period (or an applicable Extended Reporting Period).

If either fails, there is no coverage. A claim arising from injury before the retroactive date is excluded even if reported during the policy period. This is why moving ("advancing") a retroactive date forward is dangerous - it creates a gap for prior acts.

Comparison table

Claims-made premiums start low and "step up" each year as the gap between the retroactive date and current date widens, until the policy is fully mature (typically year five), when premiums approximate an occurrence policy.

Extended Reporting Periods (tail coverage)

When a claims-made policy is canceled or non-renewed, claims reported afterward could fall through the cracks. ISO addresses this with two ERPs:

• The Basic Extended Reporting Period is automatic and free. It provides a 60-day window to report claims for occurrences known before expiration, plus a 5-year mini-tail for occurrences that happened during the policy term but are reported later.
• The Supplemental Extended Reporting Period must be purchased (endorsement), is unlimited in duration, and is requested in writing within 60 days of policy termination.

Trap: the Supplemental ERP does not reinstate or increase limits - it relies on the expiring policy's reinstated aggregate for the ERP.

Worked timeline example

A medical-device firm holds a claims-made CGL with a retroactive date of 01/01/2024 and a policy period of 01/01/2026 - 01/01/2027. A device implanted on 06/01/2025 causes injury, and the patient files a claim on 09/15/2026.

• Injury date (06/01/2025) is on or after the retroactive date (01/01/2024) - condition 1 met.
• Claim first made (09/15/2026) falls within the policy period - condition 2 met.

Result: covered. Now change the retroactive date to 01/01/2026. The injury (06/01/2025) predates it - no coverage, even though the claim was filed during the active period. This illustrates why advancing the retroactive date strips prior-acts protection.

The Three Reporting-Period Tail Options

When a claims-made CGL ends, ISO offers escalating tail protection. The Basic ERP is automatic and free: a 60-day window to report claims for occurrences already known, plus a five-year window for claims arising from incidents reported to the insurer during the policy. The Supplemental ERP is a purchased, often unlimited tail bought within 60 days of expiration, for an additional premium capped by ISO (commonly up to 200% of the annual premium).

Step Factors and Maturity

Claims-made premiums start low (a "first-year" step factor) and rise each year toward a mature rate (typically year 5), because each successive year exposes the insurer to more accumulated incident years. An occurrence policy charges the full long-tail cost up front. The exam uses this to explain why a growing firm might prefer occurrence coverage despite the higher initial premium.

Trigger Recap

A claim is covered under claims-made only when the injury is on or after the retroactive date AND the claim is first made and reported during the policy period or an applicable ERP.

Managing the Transition Between Programs

The practical danger with claims-made coverage appears when a business changes insurers or closes, because incidents that already happened may not yet have produced claims. The exam tests the two fixes: tail coverage, formally an extended reporting period purchased from the departing insurer, lengthens the time to report claims for past incidents, while nose coverage from a new insurer accepts the old retroactive date and removes the need to buy tail. A retiring professional with no successor almost always needs a supplemental extended reporting period, often unlimited, to stay protected.

When a stem describes a doctor or accountant leaving practice, or a firm switching carriers, the correct answer usually names one of these mechanisms. Remember that occurrence coverage avoids the problem entirely because the trigger is the date of injury, which is why a growing firm may accept the higher early premium of an occurrence form to escape the retroactive-date trap.