8.3 Occurrence vs. Claims-Made Triggers

What a Coverage Trigger Decides

A coverage trigger determines which policy responds to a loss — critical when injury and the resulting claim fall in different policy years (the "long-tail" problem common to liability). The two triggers are tested on virtually every P&C exam.

The ISO Commercial General Liability Forms

The Commercial General Liability (CGL) policy is issued on two ISO coordinated forms:

• CG 00 01 — Occurrence form: responds when the injury/damage occurs during the term. Simplest to administer; no retroactive date.
• CG 00 02 — Claims-Made form: responds when the claim is first made during the term, on or after the retroactive date.

Both use the same standard limits structure: a Per-Occurrence limit, a General Aggregate, a Products-Completed Operations Aggregate, Personal & Advertising Injury limit, Medical Payments, and Damage to Premises Rented to You (Fire Legal).

Trap: The General Aggregate caps all covered losses in the policy year EXCEPT products-completed operations, which has its own separate aggregate.

Claims-Made Mechanics: Retroactive Date and Tail

Claims-made coverage adds two features the exam loves:

1. Retroactive date: the earliest date an injury can occur and still be covered. An injury BEFORE the retroactive date is never covered, no matter when the claim is filed. Advancing (moving forward) the retro date narrows coverage — a red flag at renewal.
2. Extended Reporting Period (ERP / "tail"): lets claims be reported after the policy ends for injuries that occurred during the term.
   • Basic (mini) tail: automatic, short (often 60 days for any claim, up to 5 years for occurrences already reported).
   • Supplemental tail: purchased, UNLIMITED reporting time for the additional premium.

Worked timing: Injury occurs March 2025 (after a Jan 2024 retro date) but the lawsuit is not filed until 2027. A claims-made policy in force in 2025 covers it ONLY if a tail/ERP is in effect when the 2027 claim is made; an occurrence policy from 2025 covers it outright.

Why the Distinction Matters at Transition

Moving between trigger types creates gaps if mishandled:

• Switching FROM occurrence TO claims-made: prior occurrence policies still cover earlier injuries, so the new claims-made retro date can match the switch date.
• Switching FROM claims-made TO occurrence (or to a new insurer): buy a supplemental ERP (tail) from the old insurer, or require prior acts (nose) coverage from the new one, so late-reported claims for old injuries are not orphaned.
• Going bare or retiring: an unlimited supplemental tail prevents a coverage gap for incidents that already happened.

Basic, Mini, and Supplemental ERPs

Claims-made policies offer extended reporting periods (ERPs, or "tails") so claims made after the policy ends but arising from covered prior acts can still be reported:

The supplemental ERP is critical when a professional retires or switches carriers, preventing a coverage gap for work already performed.

Reading a Trigger Scenario

The exam tests trigger logic with date scenarios. Under an occurrence policy, the policy in force when the injury happened responds — even if the claim arrives a decade later, which is why occurrence forms accumulate "long-tail" liability. Under a claims-made policy, the policy in force when the claim is first made responds, provided the injury occurred on or after the retroactive date and before policy expiration. A claim for an injury before the retroactive date is not covered, no matter when reported — the single most common claims-made trap on the exam.

Laser Dates, Nose Coverage, and Stepped Premiums

When a buyer moves from one claims-made insurer to another, the new carrier can either match the old retroactive date (preserving prior-acts coverage, called nose or prior-acts coverage) or impose a new retroactive date, leaving the buyer to purchase a tail from the old carrier. Underwriters sometimes apply a laser — a specific exclusion for a known problem date or matter. Claims-made premiums are typically stepped, rising in the first several mature years as the prior-acts exposure grows, then leveling off — another reason an exiting insured needs a tail rather than just non-renewing.

Trigger Quick-Reference

Bottom line: Occurrence shifts long-tail risk to the insurer that wrote the policy when the harm happened; claims-made keeps that risk with the current insurer only while coverage (and the retro date) stays intact.