Key Takeaways
- An occurrence policy responds to incidents that happen during the policy period, even if the claim is filed years later.
- A claims-made policy responds to claims made during the policy period for incidents after the retroactive date.
- Switching carriers, retiring, or selling a business on a claims-made form can create a gap unless you secure prior acts or tail coverage.
- Your declarations page, policy form title, and retroactive date field tell you which trigger your policy uses.
A claims-made policy covers claims first made during the policy period for incidents after its retroactive date. An occurrence policy covers incidents that happen during the policy period, whenever the claim arrives. The trigger decides which policy responds to an old mistake, says the team at Bozzuto Group, a San Diego–based specialty commercial insurance brokerage.
Most business owners never look at the coverage trigger until a claim surfaces from a job finished three years ago. By then, the answer to "which policy pays?" is already locked in by language you agreed to at binding. Understanding the two forms now helps you avoid gaps later.
What is an occurrence policy?
An occurrence policy is a liability policy that responds to bodily injury, property damage, or other covered harm that occurs during the policy period. The date the injury or damage happened controls, not the date someone sues you.
For example, imagine a contractor who carried an occurrence general liability policy in 2023. A homeowner discovers water damage in 2026 and traces it to work performed and damage that began in 2023. The 2023 policy is the one that would be looked to, even if the contractor has since changed carriers. Whether it pays still depends on the policy wording and exclusions.
Occurrence forms are common for commercial general liability, commercial auto, and many umbrella policies. Their main advantage is permanence: once the policy period ends, coverage for incidents in that period does not disappear when you cancel or switch.
What is a claims-made policy?
A claims-made policy responds to claims first made against you during the policy period, provided the wrongful act or incident occurred on or after the policy's retroactive date. Many forms are "claims-made and reported," meaning you must also report the claim to the carrier during the policy period or a short window after it.
What is a retroactive date?
The retroactive date is the earliest date an incident can occur and still be covered. If your retroactive date is January 1, 2022, a claim made today about advice you gave in 2021 generally would not be covered. Keeping the same retroactive date from one renewal to the next, often called maintaining continuity, is one of the most important details on a claims-made policy.
Why do insurers use claims-made forms?
Some risks produce claims long after the work is done. Professional mistakes, management decisions, and data breaches can stay hidden for years. Claims-made forms let carriers price coverage based on what they know today instead of guessing at claims that may surface a decade later.
Claims-made vs. occurrence: how do they compare?
| Feature | Occurrence | Claims-Made |
|---|---|---|
| What triggers coverage | Injury or damage during the policy period | Claim made (and often reported) during the policy period |
| Retroactive date | Not applicable | Incident must occur on or after it |
| After cancellation | Past periods remain in place | No coverage for new claims unless tail coverage is purchased |
| Typical lines | General liability, auto, many umbrellas | Professional (E&O), D&O, cyber, EPLI, some product and pollution liability |
| Pricing pattern | Reflects full exposure from the start | Often lower in early years, rising as the policy matures |
Which coverages usually use each form?
Most errors and omissions insurance, directors and officers insurance, cyber liability, and employment practices liability policies are written on a claims-made basis. General liability is usually occurrence-based, though some specialty markets, including certain carriers that write high-risk or emerging industries, offer general or products liability on claims-made forms.
That last point matters for businesses in cannabis, hemp, nutraceuticals, and similar industries. If your product liability is claims-made, a product sold today could generate a claim after you have let the policy lapse. Our guide to general liability vs. professional liability explains how these lines fit together.
What happens when you switch carriers, retire, or sell?
Transitions are where claims-made policies create the biggest surprises. Before you make a change, work through these points:
- Ask for prior acts coverage. When you move to a new carrier, request that the new policy keep your existing retroactive date. If the new carrier resets it to the new policy's start date, past work loses coverage.
- Understand the extended reporting period. An extended reporting period, commonly called tail coverage, gives you additional time to report claims after a claims-made policy ends. It does not cover new incidents, only claims arising from covered acts before the policy ended.
- Know the deadline to buy the tail. Many policies give you a limited window after cancellation or nonrenewal to purchase an optional tail. Missing it may forfeit the option.
- Report circumstances before the policy ends. Many claims-made forms let you give notice of a potential claim during the policy period so a later claim attaches to that policy. Use this when you know of a problem that has not yet become a demand.
If you are selling or closing a business, the purchase agreement may require the seller to buy tail coverage. Review this with your attorney before closing.
How can you tell which form you have?
- Look at the policy form title on the declarations page or forms schedule. Claims-made forms usually say so in the title or in a bold notice on the first page.
- Check for a retroactive date field. If one appears, the policy is claims-made.
- Read the insuring agreement. Language such as "claim first made against the insured during the policy period" signals a claims-made trigger.
- Note any reporting requirements and deadlines in the conditions section.
How Bozzuto Group Helps
We review each policy in your program and identify which ones are claims-made, what the retroactive dates are, and whether those dates carried over correctly at your last renewal. When you change carriers, we push for prior acts coverage and flag any retroactive date reset before you bind.
If you are winding down, selling, or restructuring, we price tail options early so the cost is part of your planning instead of a last-minute surprise. For high-risk industries where claims-made product or general liability is common, we compare available occurrence options so you can weigh the tradeoffs. Coverage depends on the carrier and policy wording, so we walk through the actual form language with you.
Not sure which trigger your policies use? Call Bozzuto Group at 858-805-1865 or request a quote and we will review your current program.
Frequently Asked Questions
What is the main difference between claims-made and occurrence insurance?
An occurrence policy covers injury or damage that happens during the policy period, regardless of when the claim is filed. A claims-made policy covers claims first made during the policy period, as long as the incident occurred after the retroactive date. The difference matters most when you switch carriers, cancel coverage, or close a business.
What is tail coverage on a claims-made policy?
Tail coverage, formally called an extended reporting period, gives you extra time to report claims after a claims-made policy ends. It only applies to incidents that occurred before the policy ended and after the retroactive date. It does not cover new work. Availability, length, and price depend on the carrier and policy wording.
Is general liability insurance claims-made or occurrence?
Most commercial general liability policies are written on an occurrence basis. However, some specialty and surplus lines carriers offer general or products liability on claims-made forms, especially for high-risk or emerging industries. Check your declarations page and policy form title, or ask your broker, to confirm which trigger your policy uses.
Is a claims-made policy worse than an occurrence policy?
Not necessarily. Claims-made forms are standard for professional liability, D&O, and cyber coverage, and they are often less expensive in early years. They do require more attention to retroactive dates, continuous coverage, and tail options. An occurrence policy is simpler after it expires, but it may cost more or be unavailable for some risks.
What happens to my retroactive date if I change insurance companies?
It depends on what the new carrier agrees to. Ideally, the new policy keeps your existing retroactive date, which preserves coverage for past work. If the new carrier sets the retroactive date to the new policy's start date, claims from earlier work may not be covered. Confirm the retroactive date in writing before you bind.