8.3 Occurrence vs. Claims-Made Triggers
Key Takeaways
- Occurrence policies (CG 00 01) respond when injury/damage occurs during the term, even if the claim arrives years later.
- Claims-made policies (CG 00 02) respond when the claim is first made during the term, subject to a retroactive date.
- Injury before the retroactive date is never covered, regardless of when the claim is made.
- An Extended Reporting Period (tail) reports post-expiration claims; nose/prior-acts coverage handles old acts on a new policy.
- Claims-made forms dominate professional liability, D&O, and medical malpractice because of long latency periods.
What a Coverage Trigger Is
A coverage trigger answers a single question: which policy responds to a given claim? Liability claims are notorious for long-tail exposures — the injury or damage may surface years after the negligent act. The ISO Commercial General Liability program (CG 00 01) is written on an occurrence trigger, while the alternative ISO form (CG 00 02) uses a claims-made trigger. Knowing which event activates coverage, and during which policy period, is one of the most heavily tested liability concepts.
Occurrence Trigger
Under an occurrence policy, coverage applies if the bodily injury or property damage takes place during the policy period, regardless of when the claim is later reported. CG 00 01 defines an "occurrence" as an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
The practical effect: an occurrence policy provides lifetime coverage for events during its term. A claim reported in 2030 for bodily injury that happened in 2024 is handled by the 2024 policy. This is why occurrence forms can generate claims long after a policy expires.
Claims-Made Trigger
A claims-made policy responds only when the claim is first made against the insured during the policy period (and the injury occurred on or after a retroactive date). Two dates govern coverage:
- Retroactive date: the earliest date of occurrence the policy will cover. Injury before the retro date is never covered, no matter when the claim is made.
- Claim-made date: the claim must be presented to the insurer during the active policy period or an applicable reporting tail.
Claims-made forms are common in professional liability (E&O, medical malpractice) and directors & officers coverage, where long latency between act and claim makes occurrence pricing difficult.
A Side-by-Side Decision Table
The trigger question reduces to two dates: when did the injury happen, and when was the claim made/reported? An occurrence policy is triggered by the date of injury; a claims-made policy is triggered by the date the claim is first made, provided the injury occurred on or after the retroactive date.
| Situation | Occurrence policy | Claims-made policy |
|---|---|---|
| Injury in 2024, claim filed 2027 | 2024 policy responds | Policy in force in 2027 (if retro date ≤2024) |
| Injury before retroactive date | Covered if a policy was in force then | Excluded entirely |
| Coverage lapses, late claim arrives | Old occurrence policy still responds | Need tail (ERP) to be covered |
Worked example: a contractor's faulty work in 2024 causes water damage discovered and claimed in 2027. The 2024 occurrence CGL responds because the property damage happened then. Under a claims-made form, the policy in force in 2027 responds only if its retroactive date is 2024 or earlier; otherwise the claimant must rely on a purchased Extended Reporting Period (tail) from the expiring policy.
A claims-made CGL has a retroactive date of 1/1/2022 and a policy period of 1/1/2025 to 1/1/2026. Property damage occurred on 6/1/2021, but the claim was first made against the insured on 3/1/2025. Is the claim covered?
Tail and Nose Coverage
Because claims-made coverage can leave a gap when a policy is cancelled or replaced, two devices fill it:
- Extended Reporting Period (ERP), or "tail": lets the insured report — after the policy ends — claims for injuries that occurred during the policy term. ISO provides a Basic ERP (a built-in mini-tail, often 60 days for claims and up to 5 years for occurrences known and reported) plus an optional Supplemental ERP that can be unlimited in duration and must be purchased.
- "Nose" coverage: a prior acts provision (or an earlier retro date) on a new policy that picks up claims for old acts — the reverse of a tail.
A physician retires and lets her claims-made malpractice policy lapse. Six months later a patient files suit for treatment given while the policy was active. To be protected, the physician most needs:
Comparing the Two Triggers
| Feature | Occurrence (CG 00 01) | Claims-Made (CG 00 02) |
|---|---|---|
| Trigger event | Injury/damage during policy period | Claim first made during policy period |
| Retroactive date | None | Yes — bars prior injury |
| Long-tail handling | Original-year policy responds years later | Tail/ERP needed after expiration |
| Typical lines | General liability, auto, homeowners | Professional liability, D&O, medical malpractice |
| First-year pricing | Higher (full coverage) | Lower (limited prior exposure), then 'matures' |
Exam trap: a claims-made policy in its first mature year is generally more expensive to replace with an occurrence policy because the buyer must add a tail; and an insured switching insurers must align the retroactive date to avoid a coverage gap.
Claims-Made Maturity and Step-Rating
A claims-made policy in its first year has the lowest premium because it can only respond to claims for acts occurring after the retroactive date — typically just that first year of exposure. Each renewal lengthens the period between the retro date and the present, so more potential prior acts fall inside coverage. The policy is said to "mature" over roughly five years, with premium step-rated upward each year until it reaches a mature claims-made rate that approximates an occurrence rate.
This is why an insured who has carried claims-made coverage for years faces a real cost to convert: dropping the policy without a tail abandons all those accumulated prior-acts years. The exam phrases this as: the longer a claims-made policy has been in force, the greater the loss exposure it covers, and the higher the cost of an Extended Reporting Period.
Aligning Retroactive Dates Between Insurers
When an insured moves from Insurer A to Insurer B, the new policy should carry a retroactive date no later than the original retro date (or use prior-acts/nose coverage). If Insurer B writes a new, advanced retroactive date, every act between the old retro date and the new one becomes uninsured — a gap that produces a denied claim and an E&O complaint against the producer. Advancing a retroactive date is one of the few changes that can create a silent, catastrophic coverage hole, so it is heavily tested.