The core difference
An occurrence policy covers incidents that happen during the policy period, no matter when the claim is reported — even years after the policy expires. A claims-made policy only responds if the claim is made and reported while the policy (or an extended reporting period) is in force.
General liability is usually occurrence. Professional liability, medical malpractice, directors & officers, employment practices, and cyber are usually claims-made.
| Occurrence | Claims-made | |
|---|---|---|
| Trigger | Date of the incident | Date the claim is made |
| Coverage after cancellation | Continues for past incidents | Ends unless tail is purchased |
| Retro date matters | No | Yes — critical |
| Typical lines | General liability, property, auto | E&O, D&O, EPLI, cyber, malpractice |
| First-year price | Higher | Lower, steps up for ~5 years |
Retro dates and step factors
A claims-made policy's retroactive date is the earliest incident date it will cover. In year one it usually equals the policy start date, so only new work is covered — that is why first-year claims-made premiums are cheap. Each year the exposure grows and the price 'steps up' until it matures around year five.
When you change carriers, insist that the new policy carry your original retro date. Resetting it wipes out coverage for everything you have already delivered.
Tail coverage
If you cancel, retire, or sell the business, buy an extended reporting period (tail) so claims arising from past work can still be reported. Tails typically cost 100–200% of the expiring annual premium and can run one, three, five years, or unlimited. Budget for it before you plan an exit.
Frequently asked questions
Which is better, occurrence or claims-made?
Occurrence is simpler and safer where it is available. Many professional lines are only offered claims-made, in which case protecting the retro date and buying a tail is what keeps you safe.
How do I find out which one I have?
Look at the declarations page — claims-made policies state 'claims-made and reported' and show a retroactive date. If you see a retro date, it is claims-made.
Do I need a tail if my new carrier gives prior acts coverage?
Usually not. If the new claims-made policy picks up your original retro date, it covers the prior work and a tail becomes unnecessary.