11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates
Key Takeaways
- The occurrence form (CG 00 01) is triggered when injury/damage takes place; the claims-made form (CG 00 02) is triggered when the claim is first made.
- Occurrence forms respond from the policy in force when injury happened, even years later; claims-made forms respond from the current policy, subject to the retroactive date.
- Injury occurring before the retroactive date is never covered under a claims-made policy, regardless of report date.
- Basic ERP (mini-tail) is automatic and free; Supplemental ERP (maxi-tail) is purchased, often costing up to ~200% of last premium and requested within 60 days.
- Claims-made premiums use rising step factors as the program matures over roughly five years, explaining why early-year premiums are lower.
Two Coverage Triggers, Two Forms
The ISO CGL is published in two parallel forms that differ only in their coverage trigger - the event that determines which policy period responds to a loss:
- Occurrence form (CG 00 01) - triggered when the bodily injury or property damage takes place during the policy period, regardless of when the claim is reported.
- Claims-made form (CG 00 02) - 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.
Most small and mid-size commercial accounts use the occurrence form. Claims-made is common in professional and certain products/long-tail exposures where injuries may surface years after the act.
The Long-Tail Problem the Trigger Solves
Consider a product manufactured in 2020 that causes injury discovered in 2026. Under an occurrence policy, the policy in force in 2020 (when the injury-causing event happened) responds - even though that policy expired years ago. Under a claims-made policy, the policy in force in 2026 (when the claim is made) responds, subject to the retroactive date.
This is why occurrence forms can produce "stacking" of old policies and why claims-made forms exist: insurers can more accurately reserve for losses they know about in the current year. The exam frequently gives a manufacture date, an injury-discovery date, and a claim-report date, then asks which year's policy pays. Map each date to its trigger.
Retroactive Date and Tail Coverage
The retroactive date is the linchpin of claims-made coverage. Injury occurring before the retroactive date is never covered, no matter when the claim is made. Insurers set the retroactive date to limit how far back unknown exposures reach.
When a claims-made policy is cancelled or non-renewed, two reporting extensions protect the insured:
| Feature | Also called | What it does | Cost |
|---|---|---|---|
| Basic Extended Reporting Period | Mini-tail / automatic | Reports claims for a short window (typically 60 days for late claims, 5 years for occurrences already known) | Automatic, no charge |
| Supplemental Extended Reporting Period | Maxi-tail / SERP | Unlimited time to report claims for injuries before the policy end | Purchased; up to ~200% of last premium |
The Supplemental ERP must usually be requested in writing within 60 days of policy expiration.
Claims-Made Maturity and Step Factors
A claims-made program "matures" over its first several years. In year one, the retroactive date equals the policy inception, so very few prior injuries can generate claims; the premium is discounted with a low step factor (e.g., 0.40 of mature premium). Each renewal increases the window of covered prior injuries, so the step factor rises (0.60, 0.80, then 1.00 at maturity, typically year five).
Worked example: A mature claims-made annual premium is $20,000. A first-year step factor of 0.40 produces a $8,000 premium; a third-year factor of 0.80 produces $16,000. The exam may ask you to apply a step factor or to explain why early claims-made premiums are lower than equivalent occurrence premiums - the answer is the narrow window of covered prior acts.
The Three Date-Mapping Rules
Claims-made trigger questions almost always supply three dates — when the injury occurred, the retroactive date, and when the claim was first made — and ask whether the policy responds. Apply these rules in order:
- Injury must occur on or after the retroactive date. If it occurs even one day before, coverage is gone permanently; no ERP revives it.
- The claim must be first made during the policy period (or during an active ERP).
- Both conditions must be satisfied together. Passing one but failing the other means no coverage.
| Injury date | Retro date | Claim made | Covered? |
|---|---|---|---|
| 6/2024 | 1/2024 | 8/2026 (in period) | Yes — both met |
| 6/2023 | 1/2024 | 8/2026 (in period) | No — injury pre-retro |
| 6/2024 | 1/2024 | 4/2028 (post-expiry, no ERP) | No — claim too late |
The Basic ERP can rescue only the third row's timing problem, never the pre-retroactive-date problem in row two.
Comparing the Two Triggers Side by Side
When deciding which form fits a risk, weigh how quickly losses surface against the cost of maintaining tail coverage:
| Feature | Occurrence form | Claims-made form |
|---|---|---|
| Trigger event | Injury/damage happens in period | Claim first made in period |
| Old policies relevant? | Yes - prior years can respond | No - only current policy/ERP |
| Retroactive date | None | Yes - hard backstop |
| Tail coverage needed? | No | Yes, on cancellation/non-renewal |
| Early-year premium | Full from year one | Discounted via step factors |
| Best fit | Short-tail, predictable exposures | Long-tail, professional/products risks |
A producer who replaces an expiring occurrence form with a claims-made form must set the retroactive date to the original occurrence policy's inception - otherwise a coverage gap opens for injuries that happened in the past but have not yet generated a claim.
Switching Carriers Without a Gap
The two dangerous transitions are tested often:
- Claims-made to occurrence (or to a new claims-made carrier): the expiring claims-made policy stops responding to claims reported after it ends. The insured must buy a Supplemental ERP (tail) on the old policy, or have the new carrier grant "prior acts" coverage by setting the new retroactive date back to the original inception. Either approach closes the gap.
- Occurrence to claims-made: the occurrence years are self-protecting (any late claim goes back to the policy in force when injury occurred), so no tail is needed on the old policy — but the new claims-made retroactive date should match the prior inception to avoid double-charging or gaps.
Rule to memorize: tail protects the claims-made years; prior-acts/retro-date protects the new policy. An occurrence policy is its own tail and never needs ERP coverage purchased.
A defective product is manufactured in March 2021. A consumer is injured in June 2023 and files a lawsuit in September 2025. The manufacturer has had an OCCURRENCE-form CGL renewed every year. Which policy year responds?
Under a claims-made CGL, an injury occurs two months BEFORE the policy's retroactive date, but the claim is first made during the current policy period. How does the policy respond?