11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates

Two Coverage Triggers

The CGL is sold on two trigger bases. The occurrence form (ISO CG 00 01 04 13) responds whenever the bodily injury or property damage occurs during the policy period, no matter when the claim is filed — even years later. The claims-made form (ISO CG 00 02 04 13) responds 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.

Memorize the trigger sentence: occurrence = when it happened; claims-made = when the claim was made. The bar exam loves a fact pattern where injury and claim straddle two different policy periods and asks which form responds.

The Retroactive Date

The Retroactive Date is the linchpin of a claims-made policy. Injury that occurs before the retroactive date is never covered, even if the claim is made during the active policy period. Insurers set it to avoid "buying" the insured's prior exposure.

• A retroactive date that matches the first claims-made policy's inception is the most common and limits coverage to injuries on/after that day.
• Advancing (moving forward) the retroactive date on renewal is dangerous — it creates a coverage gap for the in-between period.
• A policy written with no retroactive date (often shown as "none") covers prior injury back to whenever it occurred — the broadest, called full prior acts.

Claims-Made Triggers: All Five Conditions

Under ISO CG 00 02, a claim is covered only if all of these are met:

1. The injury occurred on or after the Retroactive Date.
2. The claim is first made during the policy period or any applicable Extended Reporting Period.
3. The insured had no knowledge of the claim before the policy began.
4. The injury occurs before the end of the policy period.
5. Notice is given as required by the policy.

A claim is "first made" on the earliest of: the date the insurer receives written notice of the claim, or the date the insured reports an occurrence that may result in a claim (this is the helpful "laser"/notice provision).

Occurrence vs. Claims-Made CGL

The CGL is offered on two coverage triggers, and the exam tests how each interacts with retroactive dates and extended reporting:

Retroactive Date Discipline

A claims-made policy is worthless for an old event if the retroactive date is later than the event. Insureds switching carriers must keep the retro date the same ("maintain retro") or buy a tail, or they create a gap. Moving the retro date forward is a common error that strips coverage for prior acts.

Extended Reporting Periods (Tails)

• Basic ERP - automatic, short (often a 60-day mini-tail for claims and a 5-year tail for occurrences reported late), no extra premium.
• Supplemental ERP - purchased, can extend reporting for years or indefinitely; must usually be elected within a set window (e.g., 60 days) after the policy ends.

Worked Example

A contractor carries an occurrence CGL in 2024. Faulty work in 2024 causes a structural failure discovered in 2028; a suit follows in 2029. The 2024 occurrence policy responds because the damage occurred in 2024 - even though the contractor has since switched insurers. Now suppose the contractor instead had a claims-made policy with a 2025 retroactive date. The 2024 work predates the retro date, so the claims-made policy denies the 2029 claim. This comparison - occurrence reaching back to when damage happened vs. claims-made barred by the retro date - is the most heavily tested trigger concept.

Extended Reporting Periods (Tail Coverage)

Because claims-made coverage ends when the policy lapses, ISO provides Extended Reporting Periods (ERPs), commonly called tail coverage, to report claims after expiration for injuries that occurred during the policy term.

The Supplemental ERP (full tail) must be requested in writing within 60 days of expiration; once issued it cannot be cancelled.

The Claims-Made "Step" and Maturity

Claims-made policies are priced on a step rating because the exposure grows each year the retroactive date stays fixed. A first-year (Step 1) claims-made policy is cheap — it can only be hit by claims for injuries in that single year. By the fifth year and beyond, the policy is mature: it covers claims for any injury back to the retroactive date, so its price approaches that of an occurrence policy.

This is why moving from claims-made to occurrence late in the relationship offers little savings, while moving early does. Candidates should be able to state that a mature claims-made policy and an occurrence policy cover roughly the same exposure for a given year — the difference is purely the reporting window and the need for tail coverage at the end.

Occurrence vs. Claims-Made: When to Use Which

Occurrence coverage is preferred by insureds because once an occurrence policy covers a year, that year is locked in forever — "long-tail" injuries (e.g., latent toxic exposure) are paid by whichever year the injury occurred, even decades later. Claims-made is cheaper early and lets insurers reserve more accurately, so it dominates lines with long claim-development tails.

Stacking trap: if an insured switches from claims-made to occurrence (or vice versa) mid-history, the changeover must be "seamless." A claims-made-to-occurrence switch needs tail on the old policy; an occurrence-to-claims-made switch needs an early retroactive date (or full prior acts) on the new one. A gap in either direction leaves the insured exposed.

A last distinction tested often: under a claims-made form the policy in force when the claim is reported pays (subject to the retroactive date), whereas under occurrence the policy in force when injury happened pays. Identify the trigger first, then find the matching policy year.