Claims-Made vs Occurrence

Overview

The distinction between claims-made and occurrence coverage triggers is one of the most consequential concepts in insurance compliance. It determines when a policy responds to a claim — and more importantly, when it does not.

Occurrence Coverage

An occurrence policy covers bodily injury or property damage that occurs during the policy period, regardless of when the claim is actually filed. If a contractor installs faulty wiring in 2025 under an occurrence policy, and the wiring causes a fire in 2028, the 2025 policy responds — even though the policy has long since expired.

This is the standard trigger for Commercial General Liability (CGL) policies. Most compliance programs require occurrence-based CGL coverage because it provides long-tail protection against claims that surface months or years after the work is performed.

Claims-Made Coverage

A claims-made policy covers claims that are first made during the policy period. The incident can have occurred before the policy inception (as long as it falls after the retroactive date), but the claim itself must be filed while the policy is active. If the policy expires and a claim is filed the next day, there is no coverage — unless the insured purchased an extended reporting period (ERP), commonly called "tail coverage."

Claims-made coverage is standard for:

• Professional Liability (Errors & Omissions): Claims often arise long after the professional service was rendered
• Directors & Officers (D&O) Liability: Allegations against leadership may surface years after the relevant decisions
• Employment Practices Liability (EPLI): Discrimination or harassment claims can have long lead times

The Retroactive Date

Claims-made policies include a retroactive date — the earliest date for which claims are covered. If the retroactive date is January 1, 2024, and the incident occurred on December 15, 2023, the claim is not covered, even if it is reported during the policy period. A retroactive date that matches the policy inception date (called a "retro date at inception") is the most restrictive. A "full prior acts" retroactive date (going back to the insured's first day of operations) is the broadest.

Why This Matters for Compliance

When reviewing a Certificate of Insurance, the claims-made vs. occurrence checkbox on the General Liability row is a critical data point. If your compliance program requires occurrence coverage and the certificate shows claims-made, the vendor is non-compliant. If you must accept claims-made coverage, verify:

1. The retroactive date covers the full period the vendor has worked for you
2. The vendor has a plan for tail coverage if they change carriers or discontinue the policy
3. The reporting obligations are understood — late-reported claims may be denied

Example

A property management company hires an engineering firm to inspect a building's structural integrity. The firm carries Professional Liability on a claims-made basis. The inspection is performed in 2025. In 2027, a structural deficiency is discovered that the firm should have caught. If the firm maintained continuous claims-made coverage from 2025 through 2027 with an appropriate retroactive date, the 2027 policy covers the claim. If the firm cancelled its policy in 2026, there is no coverage unless tail coverage was purchased.