11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates
Key Takeaways
- Occurrence forms trigger when injury occurs during the term; claims-made forms trigger when the claim is first made during the term.
- The retroactive date is fatal to claims-made coverage: injury before it is never covered regardless of reporting date.
- Basic ERP is automatic (60 days / 5 years); the supplemental ERP must be requested in writing within 60 days and gives an unlimited reporting window.
- Switching from claims-made to occurrence requires purchasing tail coverage to avoid a gap for late-reported claims.
- ERPs extend only the reporting window - they do not extend the policy period or restore exhausted aggregate limits.
Two Coverage Triggers, One Form Family
ISO publishes the CGL in two parallel coverage forms that differ only in their coverage trigger - the event that activates coverage:
- Occurrence form (CG 00 01): Triggered when bodily injury or property damage occurs during the policy period, regardless of when the claim is reported. A claim filed years after the policy expires is still covered if the injury happened during the term.
- 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.
The distinction matters most for "long-tail" liability - exposures like construction defects, pollution, or product injuries that surface years after the work was done.
Occurrence vs. Claims-Made Compared
| Feature | Occurrence (CG 00 01) | Claims-Made (CG 00 02) |
|---|---|---|
| Trigger | Injury occurs during term | Claim first made during term |
| Reporting deadline | Any time, even after expiration | During term or ERP |
| Retroactive Date | Not used | Required; injury must be on/after it |
| Long-tail exposure | Higher (stacking multiple years) | Controlled by retro date |
| Typical premium early | Higher | Lower in first "mature" years |
| Tail / ERP needed at cancellation | No | Yes, to cover late-reported claims |
Because an occurrence policy can be triggered decades later, insurers face open-ended exposure - which is why claims-made was developed for professional and high-tail lines.
The Retroactive Date
The Retroactive Date is the linchpin of claims-made coverage. Injury or damage that occurs before the retroactive date is never covered, no matter when the claim is reported. Insurers may set it to the policy's first inception (no prior coverage) or advance it, but advancing a retroactive date creates a dangerous coverage gap for the insured's prior acts.
A claims-made policy with no retroactive date (or one dated "none"/full prior acts) is the broadest form - it covers any past injury, limited only by when the claim is made. Producers should never let a retroactive date silently advance at renewal.
Extended Reporting Periods (Tail Coverage)
When a claims-made policy ends - through cancellation, nonrenewal, or a switch to occurrence - claims reported afterward would fall into a gap. ISO addresses this with two Extended Reporting Periods (ERPs):
- Basic Tail (BERP): Automatic, no extra premium. Covers claims reported within 60 days for occurrences during the term, and within 5 years for occurrences the insured reported to the insurer within 60 days of expiration.
- Supplemental Tail (SERP): Optional, purchased for additional premium, must be requested in writing within 60 days of termination. Provides an unlimited reporting window for covered prior occurrences.
ERPs extend only the reporting window; they do not extend the policy period or restore exhausted aggregate limits.
A claims-made CGL has a retroactive date of 1/1/2024 and a policy period of 1/1/2026-1/1/2027. Property damage occurs on 6/1/2023 but the claim is first made on 3/1/2026. Is the claim covered?
The Laser Trap When Switching Forms
A frequent scenario question: an insured moves from an occurrence policy to a claims-made policy. The new claims-made insurer sets the retroactive date equal to the new policy's inception. Result - injuries that occurred under the old occurrence policy are still covered by that old policy (occurrence trigger), and new injuries are covered by the claims-made policy. No gap exists only because the prior occurrence form picks up late-reported old claims.
The reverse switch - claims-made to occurrence - is the danger zone: the expiring claims-made policy needs a tail (SERP), or late-reported claims from the claims-made years fall through entirely. Producers must arrange tail coverage at the switch.
An insured is replacing a claims-made CGL with an occurrence CGL. What action best protects against a coverage gap for claims reported after the switch?
Why Insurers Use Claims-Made Pricing
Claims-made forms are priced on a maturity curve. In the first year (year one), the only claims that can be reported are for occurrences in that single year, so exposure - and premium - is low. Each subsequent year adds another year of prior acts to the reporting pool, so the premium steps up until the policy reaches maturity (typically year five), where pricing approximates an occurrence policy.
This is why a business that has carried claims-made coverage for several years cannot simply drop it to save money - the accumulated prior-acts exposure still needs the retroactive date and a tail. Switching carriers within claims-made usually preserves the old retroactive date through a prior acts or nose coverage arrangement on the new policy, which is the mirror image of buying a tail.
Reporting Conditions and the Trigger
Under the occurrence form, the duty-to-report condition still requires the insured to notify the insurer "as soon as practicable," but late notice does not destroy the trigger unless the insurer is prejudiced. Under the claims-made form, timely reporting is part of the coverage trigger itself - a claim must be made and, depending on the form variant, reported during the policy period or ERP.
ISO offers two claims-made variants: a claims-made form (claim merely made during term) and a claims-made-and-reported form (claim must be both made and reported during the term). The reported variant is stricter. On the exam, the safe default is that claims-made coverage hinges on the date the claim is first made against the insured, anchored by the retroactive date on the early end and the ERP on the late end.