An occurrence policy covers any injury or damage that happens during the policy period, regardless of when the claim is later filed. A claims-made policy only covers claims that are both triggered and reported while the policy is in force. Most general liability policies are occurrence-based; most professional liability and cyber policies are claims-made.
Who this is for: Business owners, contractors, and professionals comparing policy forms when buying commercial liability coverage.
TL;DR / Key Takeaways
- Occurrence: The date of the incident controls coverage — a 2021 accident is covered by your 2021 policy even if the lawsuit arrives in 2025.
- Claims-made: The date you report the claim controls coverage — if your policy has lapsed, you likely have no coverage unless you purchased tail coverage (extended reporting period).
- Claims-made policies typically carry a retroactive date — claims from incidents before that date are excluded.
- Tail coverage (ERP) can extend a claims-made policy's reporting window for 1–5+ years, but adds 75–200% of the expiring annual premium.
- Switching from claims-made to occurrence mid-career can leave a gap — always consult a broker before changing policy forms.
How Each Policy Form Works
Occurrence Form
Under an occurrence policy, coverage attaches when the bodily injury or property damage occurs — not when it is discovered or when a suit is filed. This means:
- A plumber who accidentally causes water damage in January 2024 is covered by the 2024 policy even if the building owner doesn't discover mold until 2026 and sues in 2027.
- Coverage follows the policy year of the event, so historical policies remain relevant long after expiration.
- No tail coverage is needed when you cancel or retire the policy.
Where you see occurrence forms: Commercial General Liability (CGL), Business Owners Policy (BOP) liability, commercial auto liability, and workers compensation.
Claims-Made Form
Under a claims-made policy, coverage requires two things to happen while the policy is active: (1) the wrongful act or incident must occur on or after the retroactive date, and (2) the claim must be made and reported during the policy period (or during an extended reporting period).
- A management consultant's advice given in 2023 triggers an E&O claim filed in 2025. If the 2023 retroactive date is on the policy and the policy is active in 2025, coverage applies.
- If the consultant let the policy lapse in 2024, the 2025 claim has no coverage.
Where you see claims-made forms: Professional Liability / E&O, Directors & Officers (D&O), Employment Practices Liability (EPLI), Cyber Liability, and Medical Malpractice.
Side-by-Side Comparison Table
| Feature | Occurrence | Claims-Made |
|---|---|---|
| Coverage trigger | Date of injury/damage | Date claim is reported |
| Historical policies stay relevant | Yes — indefinitely | No — only if active at time of report |
| Retroactive date | Not applicable | Critical — excludes prior acts |
| Tail coverage needed at cancellation | No | Yes, if gaps are a risk |
| Tail coverage cost | N/A | ~75–200% of expiring annual premium |
| Typical policy types | CGL, BOP, Auto, WC | E&O, D&O, EPLI, Cyber, Med Mal |
| Premium in early years | Higher (full limits from day one) | Lower (small exposure pool initially) |
| Premium at maturity (5+ years) | Relatively stable | Approaches occurrence-level cost |
| Complexity at renewal | Low | Moderate — must track retro dates |
What Is a Retroactive Date?
The retroactive date on a claims-made policy is the earliest incident date the policy will recognize. Any wrongful act, error, or offense occurring before that date is excluded, even if the claim is reported while the policy is active.
Common scenarios:
- New business: The retroactive date is typically set to the policy inception date. You have no prior acts coverage.
- Continuous renewal with the same carrier: The carrier usually keeps the original retroactive date, giving you an ever-growing window of prior acts coverage.
- Switching carriers: The new carrier may impose a new retroactive date, creating a gap. Request prior acts coverage or negotiate to maintain your original date.
How to Evaluate Your Tail Coverage Needs in 5 Steps
- Identify your policy form. Check the declarations page or ask your broker whether the policy is occurrence or claims-made.
- Note your retroactive date. On a claims-made policy, confirm this matches or pre-dates your earliest professional exposure.
- Estimate your claim discovery lag. Professional liability claims often surface 2–5 years after the act — plan your tail accordingly.
- Request tail pricing at renewal. Most carriers offer 1-year, 3-year, and unlimited tails. Get a quote in writing before you decide to retire, switch carriers, or cancel.
- Coordinate with your new carrier. If you're switching, confirm the new policy's retroactive date and whether prior acts coverage bridges the gap.
Real-World Example: Architect Switches Carriers
This is an illustrative example, not a guarantee of coverage or pricing.
An architect in Texas carries a claims-made E&O policy with a $1M/$3M limit at $4,200/year. Her retroactive date is January 1, 2018 — the date she first bought the policy. She has been continuously renewing with the same carrier.
In 2024, she moves her account to a new carrier offering a lower premium of $3,600/year. The new carrier imposes a new retroactive date of January 1, 2024, leaving acts between 2018–2023 uncovered under the new policy.
Her options: - Purchase a 3-year tail from the departing carrier at approximately $6,300–$8,400 (150–200% of the $4,200 expiring premium) to cover 2018–2023 claims reported through 2027. - Negotiate with the new carrier for prior acts coverage back to 2018, which typically adds 15–30% to the new premium. - Accept the gap — a risky choice for a design professional with multi-year project exposure.
A Morrow broker walking this scenario through carrier options upfront saved the architect from an undiscovered six-year gap.
Frequently Asked Questions
Does general liability come as occurrence or claims-made?
Standard commercial general liability (CGL) policies issued on the Insurance Services Office (ISO) CG 00 01 form are occurrence-based. This is the most common form for contractors, retailers, and service businesses. A minority of carriers write CGL on a claims-made form (ISO CG 00 02) — check your declarations page if you are unsure.
Can I have both occurrence and claims-made policies at the same time?
Yes. Many businesses carry an occurrence-based CGL and a claims-made E&O or cyber policy simultaneously. The two forms cover different types of liability: CGL covers bodily injury and property damage; E&O covers financial harm from professional errors. They complement rather than duplicate each other.
What happens to my claims-made policy when I retire or close my business?
When you stop operations, your claims-made policy lapses and new claims can no longer be reported under it. You should purchase tail coverage (Extended Reporting Period endorsement) before the policy expires. Alternatively, some carriers offer an automatic free tail of 30–60 days; ask your broker what your policy provides. For most professions, a 3-to-5-year tail is the minimum prudent choice.
Is an occurrence policy always better than claims-made?
Not necessarily. In the early years of a claims-made policy, premiums are lower because the pool of reportable prior acts is small. By year 3–5 ("mature" claims-made), premiums approach occurrence levels. Occurrence policies offer simpler long-term management, but availability depends on the coverage line — most professional lines are claims-made only.
What is a "nose" endorsement?
A nose endorsement (Prior Acts coverage) on a new claims-made policy extends coverage back to an earlier retroactive date, bridging the gap when you switch carriers. It is the alternative to buying a tail from your prior carrier. Not every carrier offers nose coverage, and it typically increases the first-year premium by 15–30%.
How long can claims arise after a covered event on an occurrence policy?
Under most occurrence policies, there is no time limit imposed by the policy form itself — statutes of limitation under state law govern when a claimant can sue. Construction defect claims, for example, can have discovery rules under some state laws that extend liability exposure many years beyond project completion. This is why contractors should preserve certificates of insurance proving occurrence coverage was in force during each project year.
Does claims-made vs. occurrence affect my umbrella/excess policy?
Yes. Your umbrella must follow the underlying policy's trigger. If your primary E&O is claims-made, your umbrella sits excess of that claims-made trigger. Mismatches between primary and excess policy forms can create coverage gaps — always confirm alignment with your broker.
Why Morrow for Occurrence vs. Claims-Made Coverage
- Independent access to multiple markets. As an independent agency, Morrow places policies with multiple admitted and surplus lines carriers, so we can compare occurrence and claims-made options across the market — not just push one carrier's form.
- Retroactive date tracking. Our team maintains a record of each client's retroactive date history, flagging risks before a carrier switch creates a prior-acts gap.
- Tail coverage coordination. When clients retire, sell a business, or switch carriers, we proactively quote tail and nose options from multiple carriers so you can make an informed decision — not a panicked one.
- Claims advocacy. Morrow assists clients through the claims-reporting process, including timing notices correctly on claims-made policies to avoid late-reporting denials.
- Fast COI turnaround. When a contract requires evidence of a specific policy form (occurrence vs. claims-made), we issue certificates of insurance quickly so projects don't stall. [Morrow to confirm: typical turnaround time]
Get the Right Policy Form for Your Business
Choosing the wrong policy form — or letting a claims-made policy lapse without tail coverage — can leave your business exposed to six- and seven-figure uninsured claims. A Morrow broker will review your current policies, flag any form mismatches, and quote both occurrence and claims-made options where available.
Get a Free Quote → Talk to a Morrow Broker →
Trust strip: Morrow (Afthonea Inc, DBA Morrow) is a licensed independent commercial insurance agency. [Morrow to confirm: licensed states, NPN, and carrier appointments.] Rated [X/5] by commercial clients. [Morrow to confirm: review platform and score.]
Related Resources
- Commercial General Liability Insurance — Overview
- Professional Liability (E&O) Insurance — What It Covers
- Glossary: Extended Reporting Period (Tail Coverage)
- How Much Does Professional Liability Insurance Cost?
- Occurrence vs. Claims-Made: Contractor Guide
Author: Content reviewed by a licensed commercial P&C insurance professional with experience placing professional liability, CGL, and specialty lines for small and mid-size businesses.
Published: June 2026 Last updated: June 2026
Sources: - Insurance Services Office (ISO), CGL forms CG 00 01 and CG 00 02 - National Association of Insurance Commissioners (NAIC), commercial lines policy form guidance - Insurance Information Institute (III), "Claims-Made vs. Occurrence Policies" - State Department of Insurance resources (consult your state DOI for jurisdiction-specific rules)