An occurrence policy covers injury or damage that happens during the policy period, no matter when the claim is filed, even years after the policy expires. A claims-made policy covers claims that are made against you during the policy period, generally for injury or damage that happened after the policy's retroactive date. The difference is the coverage trigger, and it determines which policy, this year's or one from a decade ago, responds to a claim.
Most businesses buying general liability coverage never have to think about this, because the standard ISO Commercial General Liability form (CG 00 01) is written on an occurrence basis. But claims-made forms are common in professional liability, directors and officers, and specialty lines like liquor liability, and switching between the two triggers is where coverage gaps are born.
Occurrence vs. Claims-Made
An occurrence policy covers injury or damage that happens during the policy period, no matter when the claim is filed. A claims-made policy covers claims first made against the insured during the policy period, generally for injury or damage that happened after the policy's retroactive date.
What is an occurrence policy?
Under the ISO CGL form, an "occurrence" is an accident, including continuous or repeated exposure to substantially the same general harmful conditions. A customer tripping over a loose floor tile in a bakery is the classic occurrence. For the occurrence-based CGL to respond, three things must line up:
- The injury or damage must be caused by an occurrence in the coverage territory.
- The injury or damage must take place during the policy period.
- The injury or damage must not have been known, in whole or in part, by any insured (or employee authorized to receive notice of a claim) prior to the policy period.
Notice what is not on that list: when the claim is filed. If a product you sold in 2024 injures someone in 2024 but the lawsuit does not arrive until 2027, your 2024 policy responds, with its 2024 limits.
The CGL's insuring agreement states that injury or damage occurring during the policy period, and not known to have occurred before it, includes any continuation, change, or resumption of that injury or damage after the period ends. Damage that starts on your watch stays on that policy even as it worsens later.
What is a claims-made policy?
A claims-made policy flips the trigger: what matters is when the claim is first made against the insured, not when the underlying injury happened. Your current policy, with its current limits, responds to claims reported during its term.
Claims-made forms exist mostly in lines with long "tails" between the act and the lawsuit: professional liability, directors and officers, employment practices, cyber, and some specialty casualty forms. In the ISO CGL family, the claims-made counterpart to the occurrence form is CG 00 02, and ISO also publishes paired forms elsewhere, for example, Liquor Liability comes in both an occurrence version (CG 00 33) and a claims-made version (CG 00 34), each a standalone coverage form with its own insuring agreement, conditions, and limits.
Two mechanisms keep the claims-made trigger from becoming either too broad or too dangerous:
What is a retroactive date?
The retroactive date is the earliest point in time for which the policy will cover injury or damage. A claim made today for damage that occurred before the retroactive date is not covered. When you renew claims-made coverage year after year with the same retroactive date, your window of protection keeps growing. Watch the retroactive date at every renewal: if a new insurer "advances" it, everything before the new date silently falls out of coverage, years of prior work can lose protection without a single claim being denied yet.
What is an extended reporting period (tail coverage)?
When a claims-made policy ends and is not replaced, you retire, sell the business, or switch to an occurrence form, claims arriving after expiration would otherwise have no home. An extended reporting period (ERP), commonly called tail coverage, extends the time in which claims for pre-expiration injury or damage can be reported. Claims-made forms typically include a short automatic ERP and offer a longer supplemental ERP for an additional premium. The supplemental tail usually must be purchased within a strict window after the policy ends.
Occurrence vs. claims-made at a glance
Here is how the two triggers compare side by side:
| Feature | Occurrence policy | Claims-made policy |
|---|---|---|
| Coverage trigger | Injury or damage happens during the policy period | Claim is first made during the policy period |
| Which policy pays a late claim | The policy in force when the damage occurred | The policy in force when the claim arrives |
| Limits that apply | The (possibly older) limits from the year of the occurrence | Current limits at the time of the claim |
| Key date to watch | Policy period | Retroactive date |
| Coverage after the policy ends | Automatic for covered occurrences during the period | Only via an extended reporting period (tail) |
| Typical lines | CGL, commercial auto, workers compensation | Professional liability, D&O, EPL, some liquor liability |
Why do insurers use claims-made forms at all?
Because long-tail claims are hard to price. On an occurrence form, an insurer can be paying claims twenty years after collecting the premium. The claims-made trigger closes the books faster, which is why it dominates lines where lawsuits routinely surface years after the work, and why claims-made premiums often "step up" annually as the retroactive window grows.
Occurrence form advantages
- No tail coverage to buy, protection for the policy year is locked in forever
- No retroactive date to manage at renewal or when switching carriers
- Simpler to keep continuous as you change insurers over the years
Claims-made form trade-offs
- Coverage depends on maintaining continuity, a lapsed renewal or advanced retroactive date creates gaps
- Leaving the program requires purchasing tail coverage, often at a significant one-time premium
- Older claims are paid from current limits shared with newer claims
Even occurrence policies exclude known losses
A common misconception is that an occurrence CGL will pick up anything, whenever discovered. It will not. If an insured knew bodily injury or property damage had occurred, in whole or in part, before the policy's inception, any continuation, change, or re-occurrence of that injury or damage is not covered under the new policy.
The lesson: you cannot buy a fresh occurrence policy to paper over a problem you already know about.
How to switch between claims-made and occurrence coverage safely
Moving in either direction is where businesses get hurt. Work through it deliberately:
Map your triggers before you move
List every liability policy you carry and whether each is occurrence or claims-made. Note each claims-made policy's retroactive date.
Protect the retroactive date
When replacing a claims-made policy with another claims-made policy, insist the new insurer honor your existing retroactive date. An advanced date erases coverage for prior work.
Buy the tail when you exit
If you move from claims-made to occurrence coverage, or wind down the business, purchase the supplemental extended reporting period before the election window closes. Occurrence coverage going forward does nothing for acts that predate it.
Check what your contracts require
Many construction and service contracts require occurrence-based general liability, and certificate reviewers check for it. Review requirements alongside your certificate of insurance practices before binding.
For a deeper look at what the underlying policy actually covers once triggered, see our guide to what general liability insurance covers.
Frequently asked questions
Is a standard general liability policy occurrence or claims-made?
The standard ISO CGL form used by most insurers (CG 00 01) is an occurrence form: it covers bodily injury and property damage that occur during the policy period, regardless of when the claim is eventually made. A claims-made CGL version exists but is far less common.
What happens if a claim comes in after my occurrence policy expires?
The occurrence policy that was in force when the injury or damage happened responds, even if it expired years earlier. That is the core promise of the occurrence trigger, which is also why keeping copies of expired policies matters.
What is tail coverage and when do I need it?
Tail coverage is the common name for an extended reporting period on a claims-made policy. It extends the time to report claims for injury or damage that happened before the policy ended. You need it whenever claims-made coverage terminates without replacement on the same retroactive date, retirement, a sale, or a switch to an occurrence form.
Can I have both occurrence and claims-made policies at the same time?
Yes, and most businesses do: an occurrence CGL alongside claims-made professional liability or D&O coverage is a normal program. The key is knowing which trigger each policy uses so renewals and cancellations are handled correctly for each.
This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.