11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates

Two Coverage Triggers, Two Form Editions

ISO issues the CGL in two versions: the occurrence form CG 00 01 and the claims-made form CG 00 02. Both share insuring agreements and exclusions; they differ only in what triggers coverage.

Knowing which form responds, and on what date, is among the most heavily tested casualty concepts.

Occurrence Trigger

An occurrence policy covers bodily injury or property damage that takes place during the policy period, no matter when the resulting claim is filed.

A claim filed years later still attaches to the policy in force when the injury occurred. This is valuable for long-tail exposures (latent injury, slow property damage) but exposes insurers to claims that surface long after the policy expires.

Claims-Made Trigger

A claims-made policy covers a claim only if both conditions are met:

• The claim is first made during the policy period (or an extended reporting period), and
• The injury or damage occurred on or after the retroactive date and before the end of the policy period.

If either test fails, there is no coverage. This lets insurers reserve more accurately and is common in professional and product-liability programs.

The Retroactive Date

The retroactive date is the earliest date of loss the claims-made policy will cover. Injury before the retro date is excluded even if the claim is reported during the policy period.

Trap: Advancing (moving forward) a retroactive date on renewal creates a gap for losses that occurred between the old and new retro dates. An insurer generally cannot advance the retro date without offering an Extended Reporting Period.

Worked Scenario

A business buys a claims-made CGL with a retro date of 1/1/2024, policy period 1/1/2026 to 1/1/2027.

• Injury occurs 6/1/2025, claim reported 3/1/2026: covered (after retro date, reported during period).
• Injury occurs 12/1/2023, claim reported 3/1/2026: not covered (before retro date).
• Injury occurs 6/1/2026, claim reported 6/1/2028 with no tail: not covered (reported after expiration).

Extended Reporting Periods (Tail Coverage)

When a claims-made policy ends, an Extended Reporting Period (ERP) lets the insured report later claims for pre-expiration losses.

The Supplemental ERP closes the gap when switching carriers or retiring from a covered activity.

Maturity: Why Claims-Made Costs Less at First

A new claims-made policy is immature because few prior loss years are eligible to be reported under it; only injuries on or after the recent retro date count. Each renewal adds a year of exposure that can be reported, so the policy matures over roughly five years.

Premiums rise with maturity until they approach occurrence-form pricing. The lower first-year cost is real but temporary, and it disappears when a long tail must eventually be purchased.

Switching Forms and Coverage Gaps

The most dangerous transition is moving from occurrence to claims-made or changing carriers. A new claims-made policy may set the retro date to the inception date, leaving prior-year injuries uncovered unless a tail is bought on the expiring policy.

Best practice tested on exams: keep the retro date as far back as the original coverage, or buy a Supplemental ERP, so no injury date falls into an uncovered window. An insurer must offer the Supplemental ERP within a set number of days after cancellation or nonrenewal.

Side-by-Side Comparison

Latent exposures (asbestos, slow water damage) favor the occurrence form because the injury date, not the discovery date, controls.

The Five Claims-Made Date Tests

Every claims-made question can be answered by checking dates against the policy. Memorize this checklist:

1. Did the injury occur on or after the retroactive date?
2. Did the injury occur before the end of the policy period?
3. Was the claim first made during the policy period or an ERP?
4. If reported after expiration, is there a valid ERP in force?
5. Was the loss otherwise covered (no exclusion)?

A "no" to any of the first four usually defeats coverage. The exam loves fact patterns that satisfy four tests but fail one.

Reporting a Potential Claim

Claims-made forms let an insured report circumstances that may give rise to a claim before an actual demand arrives. If the insured notifies the insurer of a specific occurrence during the policy period, a claim later arising from it is treated as made during that period.

This "notice of circumstance" provision protects an insured who senses litigation is coming but whose policy is about to expire. It is a key reason to report incidents promptly rather than waiting for a lawsuit.