Two liability policies can carry the same limit, the same premium and nearly the same wording, and still respond to a lawsuit in completely different ways. The difference is the trigger: the event that decides which policy year pays. Knowing whether a policy is written on an occurrence basis or a claims-made basis explains most of the surprises business owners run into when they change carriers, close a company or retire.
An occurrence policy responds to injury or damage that happens during the policy period, no matter when it is reported. If a customer is hurt at your location this year and sues three years from now, this year's occurrence policy is the one that answers, even if you have since changed insurers.
A claims-made policy responds to claims first made against you during the policy period, provided the underlying event happened after the policy's retroactive date. The policy in force when the claim arrives is the one that answers, not the policy that was in force when the mistake or injury happened.
The standard commercial general liability forms show the split clearly. The Insurance Services Office publishes an occurrence form, CG 00 01, and a claims-made form, CG 00 02. Much of their wording is identical. The differences include the insuring agreements, the duties after a claim, the other-insurance condition, and a section on extended reporting periods that exists only in the claims-made form.
Picture a consultant who gives advice in March 2024, is sued over it in May 2026, and changed insurers in January 2026.
If the new 2026 policy carried a retroactive date of January 2026, the claim would fall outside it. The old policy would not respond either, because the claim was made after it ended, unless an extended reporting period had been arranged. That hole is the single most common claims-made problem, and it is created at renewal or when switching carriers, not when the claim arrives.
General liability for most small businesses is written on an occurrence form, though claims-made general liability exists and appears in some markets and classes. Lines where claims tend to surface long after the work is done are more often claims-made, including:
The reason is pricing. When years can pass between an event and a claim, an insurer pricing occurrence coverage has to guess at losses that will not be reported for a long time. Claims-made coverage lets the insurer price the claims that actually arrive in a given year, which is why the form was developed for lines with long-tail loss development.
Some forms go a step further and are written on a claims-made-and-reported basis, meaning the claim must be both made against you and reported to the insurer within the policy period or a stated window after it. That turns late reporting into a coverage problem rather than a paperwork one.
The retroactive date on a claims-made declarations page marks how far back covered events can reach. Events before it are not covered, even if the claim is made during the policy period. The retroactive date should generally be the date your continuous claims-made coverage first began. Each renewal should carry that same date forward.
Three situations change the picture:
If a quote shows a retroactive date later than your current one, treat it as a reduction in coverage, not a detail.
With occurrence coverage, switching is simple: each old policy keeps responding for injuries that happened during its own term. With claims-made coverage, the new insurer needs to accept your existing retroactive date, often called prior acts coverage, or the old years are left without protection.
Moving from occurrence to claims-made creates a short overlap. If an event happened while the occurrence policy was in force and the claim arrives during the claims-made term, the standard claims-made form's other-insurance condition treats the occurrence policy as primary and the claims-made policy as excess, as long as the retroactive date reaches back that far.
Moving the other way, from claims-made to occurrence, leaves the reverse gap: the new occurrence policy covers only events during its own term, and the old claims-made policy covers only claims made while it was in force. Past work that has not yet produced a claim needs an extended reporting period.
The standard claims-made general liability form provides extended reporting periods when coverage is cancelled or not renewed, or is replaced by claims-made coverage with a later retroactive date. A basic period is included at no extra charge: for an occurrence reported to the insurer within 60 days after the policy ends, it gives five years to receive claims arising from it. It does not add or reinstate limits. A supplemental period of unlimited length can be bought by endorsement for an additional premium if requested in writing within 60 days after the policy ends.
Professional liability and other claims-made policies use their own versions of these terms, so the windows and prices vary widely.
Is occurrence coverage always better than claims-made?
Not necessarily. Occurrence coverage is simpler to manage over time, but claims-made coverage is common, and often standard, for professional and management liability. The right answer depends on the line of coverage, what is available in your market, and whether you can keep continuous coverage with the same retroactive date.
How do I know which trigger my policy uses?
Look at the declarations and the insuring agreement. A claims-made policy usually says so in its title or on the declarations, lists a retroactive date, and includes a section on extended reporting periods. If you are unsure, a plain-English policy translation can point to the exact language.
Does a claim have to be reported during the policy period?
Under a claims-made-and-reported form, yes, or within any short window the policy allows. Under any form, reporting promptly protects the claim, so tell the insurer as soon as you receive a demand or learn of a circumstance that could lead to one.
The time to catch a trigger problem is before you bind a renewal or change insurers, not after a lawsuit arrives. A Truscott coverage review can line up your business insurance policies by trigger, check that every claims-made policy carries your original retroactive date, and flag any quote that quietly moves it. If you are planning to switch carriers, close a location or retire, raise it early so the reporting window can be planned rather than improvised.
Tail coverage lets claims for past work be reported after a claims-made professional liability policy ends. Who needs it, how long to buy and the cost.
Business InsuranceSection 45S is permanent and, from 2026, can run on leave wages or on paid leave insurance premiums. The 12.5% to 25% rate and the tests to confirm.
