Claims-made vs. occurrence
In commercial insurance, *when* something happens can matter just as much as *what* happens. Claims-made and occurrence policies answer a deceptively simple question in very different ways: which policy responds when a claim is filed?
Misunderstanding this distinction is one of the most common—and most expensive—coverage errors in business insurance. This guide explains how claims-made and occurrence coverage work, why retroactive dates and reporting rules matter, and how continuity (or a lapse) can determine whether a claim is covered at all.
The core difference in one sentence
The difference between claims-made and occurrence coverage is about timing—not severity, fault, or merit.
- Occurrence coverage: responds based on *when the incident occurred*.
- Claims-made coverage: responds based on *when the claim is made and reported*.
Occurrence cares about the date of the event. Claims-made cares about the date of the claim.
How occurrence coverage works
Occurrence policies lock coverage to the date of the incident—regardless of when the claim is reported.
- Trigger: the incident must occur during the policy period.
- Reporting flexibility: the claim can be filed years later.
- Policy stability: once the policy period passes, that year’s coverage is “set.”
This structure is why occurrence coverage is common for General Liability and Commercial Auto. Injuries or damage may not be discovered—or litigated—until long after the event.
If the event happened during the policy term, occurrence coverage is usually there—even decades later.
How claims-made coverage works
Claims-made policies require two things: the incident must occur after a specific date, and the claim must be made and reported while the policy is active.
- Trigger: claim is first made *and reported* during the policy period.
- Retroactive date: incident must occur on or after this date.
- Strict reporting rules: late reporting can void coverage—even if the policy was active.
Claims-made coverage is most common for Professional Liability (E&O), Directors & Officers (D&O), Employment Practices Liability (EPLI), and Cyber Liability.
With claims-made coverage, timing is part of the coverage itself—not a technicality.
Retroactive dates: the invisible boundary
The retroactive date defines how far back a claims-made policy will respond to incidents.
- What it is: the earliest date an incident can occur and still be covered.
- Why it matters: incidents before the retro date are excluded—even if the claim is made today.
- Continuity benefit: maintaining uninterrupted coverage preserves the original retro date.
If a policy is canceled, lapses, or rewritten incorrectly, the retroactive date may reset— effectively erasing coverage for past work.
Losing a retroactive date can mean losing years of protection overnight.
Reporting rules and why “as soon as possible” matters
Claims-made policies are unforgiving about notice requirements.
- Claims must be reported: within the policy period (or extended reporting period, if purchased).
- Potential claims count: circumstances that *could* lead to a claim often must be reported, too.
- Late notice risk: even valid claims can be denied if reporting rules are missed.
Occurrence policies are generally more flexible on notice timing. Claims-made policies are not.
With claims-made coverage, silence can be as dangerous as a lapse.
Continuity, lapses, and tail coverage
Claims-made coverage only works if it’s continuous—or properly closed out.
- Continuous coverage: preserves the retro date and protects past work.
- Lapses: can create permanent coverage gaps for prior acts.
- Extended Reporting Period (ERP / tail): allows claims to be reported after cancellation.
Tail coverage does not extend the retro date—it only extends the time to report claims for incidents that already occurred.
Claims-made coverage must be exited deliberately—or it can fail silently.
Where businesses get burned
Most claims-made problems come from administrative decisions—not bad luck.
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Switching carriers incorrectly:
resetting the retro date when changing insurers.
Always confirm the prior acts date carries forward.
- Letting a policy lapse: even briefly, which can break continuity.
- Failing to report circumstances: assuming “it’s probably nothing” until it becomes a denied claim.
- Closing a business without tail: leaving past work permanently uninsured.
Claims-made losses are often preventable—but only if timing is managed intentionally.
Common questions
Is claims-made worse than occurrence?
No. It’s different. Claims-made policies can be efficient and cost-effective when managed correctly—but they require discipline.
Why not use occurrence for everything?
Some risks (professional services, management decisions, cyber events) develop over time and are better priced and managed on a claims-made basis.
Do I need tail coverage if I retire or sell my business?
Often, yes. If future claims could arise from past work, tail coverage may be critical.
Timing is part of the coverage
Occurrence coverage protects based on when something happened. Claims-made coverage protects based on when a claim is made—and reported. Retroactive dates, reporting rules, and continuity determine whether coverage exists at all. If you carry claims-made policies, managing timing is not optional; it’s essential.