Claims-Made vs Occurrence Policies: Retro Dates, Tail Coverage and Switching Carriers
An occurrence policy covers incidents that happen while the policy is in force, no matter when the claim is filed. A claims-made policy covers claims first made (and usually reported) while the policy is in force, but only for incidents after the policy's retroactive date. With occurrence coverage, a policy you had in 2022 can still pay a claim filed in 2029. With claims-made coverage, you need a policy in force when the claim arrives, with a retroactive date that reaches back far enough, or an extended reporting period (tail) if you've stopped buying.
Most general liability and commercial auto policies are occurrence-based. Most professional liability, D&O, EPLI, cyber and medical malpractice policies are claims-made. If any part of your business insurance program is claims-made, the retroactive date and what happens when you switch carriers or close the business matter as much as the limit.
Side by side
| Occurrence | Claims-made |
What triggers coverage | The injury or damage happens during the policy period | The claim is first made during the policy period (often also reported during it) |
When the incident must have happened | During the policy period | On or after the retroactive date and before the policy ends |
Old policies | Keep responding for incidents in their period, forever | Stop responding once they expire, unless a tail applies |
Switching carriers | Simple. No gap risk from the trigger itself | Must preserve the retroactive date or buy a tail |
Retiring or closing | Nothing more to buy | Usually need a tail |
Early-year premium | Full rate from year one | Usually lower in early years, rising as the retroactive period lengthens |
Typical lines | General liability, commercial auto, most umbrellas, property | E&O / professional, D&O, EPLI, cyber, medical malpractice, fiduciary, some pollution and products |
How the occurrence trigger works
An occurrence policy asks one question: did the bodily injury or property damage happen during the policy period?
A contractor carries occurrence-based general liability with Carrier A from 2023 to 2025 and moves to Carrier B in 2026. In 2027, a homeowner sues over water damage that began in 2024 from a faulty installation. Carrier A's 2024 policy responds, even though it expired years ago and the contractor is now with Carrier B.
This is why occurrence coverage is simple to own. Old policies remain an asset. Keep copies of every occurrence policy indefinitely, or at least the declarations pages and the carrier name, because you may need to tender a claim to a carrier you left a decade ago.
How the claims-made trigger works
A claims-made policy asks two questions:
Was the claim first made against you during the policy period?
Did the wrongful act or incident happen on or after the retroactive date (and before the end of the policy period)?
Many forms add a third: was the claim reported to the insurer during the policy period or within a short window after? Those are "claims-made and reported" policies, and late reporting alone can void coverage.
An accountant has had claims-made professional liability since 2018, with a 2018 retroactive date that's been carried forward at every renewal. In 2026 a client sues over a 2020 tax filing. The 2026 policy responds, because the claim was made in 2026 and the act (2020) is after the retroactive date (2018).
Now change one fact. The accountant let coverage lapse for four months in 2025, and the new policy that started afterward has a 2025 retroactive date. The 2020 work now falls before the retroactive date. No coverage.
The retroactive date: the most important line on the declarations page
The retroactive date (often shown as "retro date" or "prior acts date") is the earliest date an incident can have occurred and still be covered.
A retro date equal to the policy inception means the policy covers nothing you did before it started. That's normal for a first-ever policy but dangerous if you had coverage before.
A retro date carried forward from your first claims-made policy gives you continuous coverage back to that date. This is called full prior acts coverage relative to that date. Protect it.
"Full prior acts" or "unlimited" retro means no retroactive date at all: incidents from any time are covered as long as the claim is first made during the policy period and you didn't know about it beforehand.
Insurers can, and sometimes do, try to advance the retro date at renewal or when you switch, especially after a claim or a change in operations. Advancing the retro date silently strips away coverage for years of past work. Check the retro date on every renewal and every new quote.
ISO's claims-made general liability form (CG 00 02) states it doesn't cover injury or damage that occurred before the retroactive date, even if the claim is made during the policy period. Carrier forms for professional, D&O and cyber lines say much the same thing in their own words.
Not sure what retro date is on your E&O or D&O policy? TSM is an independent agency — we compare carriers for you. Call (209) 524-6366 (Modesto) or (530) 221-3031 (Redding).
The prior knowledge exclusion
Claims-made policies typically exclude claims arising from incidents you knew about, or reasonably should have expected to result in a claim, before the policy started. Applications ask this directly: "Are you aware of any fact, circumstance or situation that might give rise to a claim?"
This is where the trap closes on people who switch carriers. If you know about a problem when you apply to the new carrier, the new policy will typically exclude it. The old policy has expired, so it won't respond to a claim made later either. The fix is to report the circumstance to your current carrier before the policy ends. Most claims-made forms allow you to give notice of a potential claim, and a later claim arising from it is then treated as made during that earlier policy. Don't wait for a lawsuit.
Extended reporting periods (tail coverage)
An extended reporting period (ERP), almost always called tail coverage, extends the time you have to report claims after a claims-made policy ends. It doesn't extend the coverage period itself. The incident still has to have happened after the retro date and before the policy ended.
There are usually two kinds:
Type | How it works |
Automatic / basic tail | A short reporting window included at no extra cost when the policy is canceled or nonrenewed. ISO's claims-made GL form, for example, provides a basic ERP with a 60-day window, and a five-year window for claims arising from incidents reported to the insurer within 60 days after the policy ends. Professional lines vary widely; some include 30 or 60 days, some none. |
Optional / supplemental tail | Purchased for an additional premium, usually a one-time charge. Lengths of one, two, three, five years or unlimited are common. You usually must elect it in writing within a short window after the policy ends (ISO's GL form uses 60 days). Miss the window and the option is gone. |
Things to know about tails:
The limit. Some tails share the expiring policy's remaining aggregate; others reinstate a fresh aggregate. Ask which.
The price. Tail premium is usually quoted as a percentage of the expiring annual premium and climbs with the length of the tail. Get the tail price in writing before you need it. It's often listed in the policy itself.
Free tails. Some professional and medical malpractice policies include a free tail on death, disability or retirement once you meet age or years-insured conditions. Others don't. Read the policy's ERP section now, not the month you retire.
Non-cancellable. Once bought, a tail generally can't be canceled by the insurer.
Prior acts ("nose") coverage
The alternative to buying a tail from your old carrier is getting your new carrier to cover your past work. That's prior acts coverage, sometimes called nose coverage: the new policy is issued with a retroactive date matching your old one.
When you switch claims-made carriers, you have two clean options:
New carrier honors your existing retro date. No tail needed. This is the normal, preferred approach when you're staying in business, and most carriers will match a retro date if you've had continuous coverage and a clean history.
New carrier won't match your retro date. Buy a tail from the old carrier to cover past acts, and accept the new carrier's later retro date going forward.
What you must avoid is the third, unintended option: new policy with a new retro date and no tail. That leaves every year of past work uninsured.
Which policies are usually claims-made
Policy | Usually | Why it matters |
Professional liability / E&O | Claims-made | Errors in advice or services often surface years later. See general liability vs professional liability and E&O for real estate agents. |
Directors and officers (D&O) | Claims-made | Claims often follow a sale, merger, insolvency or board change, which is exactly when coverage changes. |
Claims-made | Former employees can file agency charges and lawsuits well after they leave. | |
Claims-made | Breaches are often discovered months after they start. | |
Medical malpractice | Either, but commonly claims-made | Patients may not discover an injury for years. Our medical practice insurance guide covers the options. |
Fiduciary liability | Claims-made | Covers retirement plan decisions that may be challenged years later. |
General liability | Usually occurrence | Claims-made GL exists and is more common in some higher-hazard or hard-to-place classes. |
Commercial auto | Occurrence |
|
Commercial umbrella | Usually occurrence | Excess over claims-made lines is claims-made. See commercial umbrella vs excess liability. |
Crime insurance uses neither trigger. It's written on a discovery or loss-sustained basis, explained in our commercial crime insurance guide.
Switching carriers: a checklist
Before you move a claims-made policy:
Find your current retro date on the declarations page.
Get the new quote in writing with the same retro date. If it shows a later date, push back or plan for a tail.
Report every known circumstance to the current carrier before it expires, in writing.
Answer the new application accurately. A misstatement on the prior-knowledge question can void coverage later.
Avoid any gap in dates. Even one day between policies can cost you the retro date.
Match the forms. If your E&O was "claims-made and reported," understand the reporting rule on the new policy too.
Keep both policies' declarations pages, plus written confirmation of the retro date.
If you're also changing agents, see switching business insurance agents. Ask the new agent to show you the retro date on the quote before you sign the broker of record letter.
Retiring, selling or closing the business
With occurrence policies, there's nothing to buy when you close. With claims-made, the day the last policy ends is the day you lose the ability to report new claims, unless you have a tail.
Retiring professionals (accountants, consultants, engineers, physicians, real estate brokers) should price the tail a year ahead and check for a free retirement tail.
Selling the business. Purchase agreements often require the seller to buy a tail on D&O, E&O and EPLI ("runoff" coverage), or require the buyer's policy to cover the seller's prior acts. Raise it early in the deal, because runoff length is a negotiated term and the premium can be significant.
Closing a nonprofit or dissolving an LLC. Claims can still be brought against former directors, officers and owners after dissolution. A D&O tail protects them.
Moving to employment. If you're joining a firm, its policy may or may not cover your past independent work. Ask for written confirmation before declining a tail.
How to choose when you have a choice
For some lines, such as general liability in certain classes or medical malpractice, both forms are available.
Choose occurrence when you want permanent protection for each policy year with no tail decisions later, and you can afford the higher early-year premium.
Choose claims-made when the early-year savings matter, you expect to keep continuous coverage for years, and you're disciplined about protecting the retro date.
For most of our professional services clients the choice is made for them, because the market writes those lines only on a claims-made basis. The job is to manage the retro date well.
FAQs
What is the difference between a claims-made and an occurrence policy?
An occurrence policy covers incidents that happen during the policy period regardless of when the claim is filed. A claims-made policy covers claims first made during the policy period for incidents on or after the retroactive date.
What is a retroactive date on an insurance policy?
It's the earliest date an incident can have occurred and still be covered by a claims-made policy. Incidents before the retro date aren't covered, even if the claim is made while the policy is active.
What is tail coverage and do I need it?
Tail coverage, or an extended reporting period, lets you report claims after a claims-made policy ends for incidents that happened while it was in force. You typically need it when you retire, close or sell the business, or switch to a carrier that won't match your retro date.
What happens to my claims-made policy if I switch insurance companies?
If the new carrier honors your existing retroactive date, past work stays covered and no tail is needed. If it assigns a new retro date, buy a tail from the old carrier or past work will be uninsured.
Is general liability claims-made or occurrence?
Most general liability policies are written on an occurrence basis. Claims-made general liability forms exist and are more common in some higher-hazard classes, so check the declarations page.
What is prior acts coverage?
It's coverage on a new claims-made policy for incidents before the policy started, created by giving the new policy a retroactive date that matches your old one.
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