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Claims-made and occurrence policies, and the retroactive date that decides which one protects you

Velocity Insurance · October 2, 2026

Claims-made and occurrence policies, and the retroactive date that decides which one protects you

Two policies, same limit, similar premium, and one of them will not cover the work you did last year. The difference is a single date on your declarations page, and it is the easiest thing in commercial insurance to lose by accident.

One date decides everything.

Every liability policy has to settle one question: which events does it cover? There are two ways to settle it. An occurrence policy covers what happened during its term, whenever the claim eventually turns up. A claims-made policy covers what is claimed during its term, provided the event happened after a date printed on your declarations page. That second condition is where the money is, and it is routinely traded away by businesses shopping on price.

The two triggers, one paragraph each

An occurrence policy is triggered by when the event happened. If someone slips on your floor in 2024 and sues in 2028, it is the 2024 policy that responds, even though it expired years ago, even if you have since moved insurers, even if you have closed the business. The year of the accident is what matters. Commercial general liability is written this way, subject to a condition excluding injury or damage you already knew about before the policy began.

A claims-made policy is triggered by when the claim is first made against you. If a client alleges in 2028 that your advice in 2024 cost them money, it is the 2028 policy that responds, provided that policy is in force when the claim arrives and the work falls after the retroactive date. Professional liability, directors and officers, cyber, and employment practices liability are usually written this way.

The consequence follows immediately. Under occurrence coverage, expired policies keep working forever. Under claims-made coverage, an expired policy is finished: it covers nothing claimed after it ended, unless you reported the circumstance during the term or bought an extended reporting period. Continuous coverage is not a nice-to-have on a claims-made line. It is the product.

The retroactive date

The retroactive date is the earliest date on which work can have been done and still be covered. Anything before it is excluded, however long you have been insured and however much you have paid.

A firm that has carried professional liability continuously since 2011 should carry a retroactive date of 2011, its original inception. Some policies go further and carry no retroactive date at all, which is called full prior acts. The same firm, if it lets coverage lapse for two months and buys fresh, can find the retroactive date reset to the new inception. Fourteen years of work has just become uninsured, and nothing about the limit or the premium will show it.

Which is why two quotes with identical limits are not comparable until you have compared their retroactive dates. It is the most valuable number on a claims-made declarations page and the one nobody reads.

Made, and reported

Some forms go further and require the claim to be both made against you and reported to the insurer inside the policy period. Those are described as claims-made-and-reported, and they are unforgiving: a claim made in the last week of the term and reported two weeks later can fall outside the old policy and outside the new one, unless the form allows a short reporting window after expiry.

Late notice is one of the most common ways a valid claims-made claim is lost, and it usually happens for an understandable reason. A client complains, you believe you can settle it down, you handle it quietly for three months, and by the time it becomes formal the reporting window has moved.

The tool for that is a notice of circumstances. Most claims-made policies let you report a circumstance that might give rise to a claim, before anyone has claimed, and once accepted the matter is tied to that policy year and covered there even if the claim itself arrives years later. Report early. Reporting something that comes to nothing costs little, and failing to report costs far more for the reverse.

What changing insurers does to it

This is where a price comparison quietly costs a business a decade of protection. When a claims-made policy moves to a new insurer, the new insurer sets a new retroactive date, and it is a matter of what they agree to rather than something that carries over automatically. The good outcome is that they match your existing date. The bad outcome is a retroactive date equal to the new policy's inception, which insures you from today forward and leaves everything you have ever done uninsured.

A related trap is the prior knowledge condition. Claims-made proposals ask whether you are aware of any circumstance that might give rise to a claim, and anything you knew about before the new policy incepted is generally excluded from it. A problem you were already aware of does not travel with you. It stays with the policy in force when you first knew, which is another reason to report circumstances rather than sit on them.

None of this makes moving insurers a mistake. It makes moving without checking the retroactive date a mistake. The question to ask, in writing, is whether the new policy carries the same retroactive date as the expiring one, and if not, what it will be.

Tail coverage, and when you need it

Because a claims-made policy stops responding when it expires, ending one leaves a hole. The fix is an extended reporting period, usually called tail coverage, or run-off where a business is winding down.

It extends the window in which a claim can be reported against the expiring policy, for work already done before it ended. It does not cover new work. It is normally bought as a one-off premium from the insurer you are leaving, and the right to elect it is generally only open for a limited window around expiry, which is why the decision cannot be deferred and dealt with later.

The situations where it matters:

  • You are retiring or closing the business, and claims about past work can still arrive.
  • You are selling the business, where a buyer should be expected to ask for run-off on the seller's past acts.
  • You have stopped doing the activity the policy covered and no longer need coverage going forward.
  • You are moving to an insurer that will not match your retroactive date, in which case the tail on the old policy covers the history the new one has excluded.
  • The professional the policy was written around is leaving, on a form built around named individuals.

Why insurers write this way at all

It is not arbitrary. Professional, management and cyber liability take years to surface: the gap between the mistake and the claim can run a very long time. An insurer writing occurrence coverage on that would still be paying claims from a policy sold two decades earlier, priced on assumptions long since overtaken.

Claims-made lets an insurer close a year and know roughly what it owes, which is a large part of what keeps the coverage available and sensibly priced. The trade is that the burden of continuity moves onto you. That is only a problem when nobody tells you.

What to check on your own policy

Take out the declarations page for any professional liability, directors and officers, or cyber policy you carry, and confirm four things.

  1. The trigger. Does the form say claims-made, claims-made-and-reported, or occurrence?
  2. The retroactive date. Is it your original inception with that class of coverage, or a later date somebody accepted along the way?
  3. The reporting terms. What has to be reported, and by when, once a claim or a circumstance arises?
  4. The extended reporting period. Is one available, for how long, at what cost, and how long after expiry can you still elect it?

Not sure what your retroactive date is?

Send us the declarations page of your professional liability, D&O or cyber policy. We will tell you what the trigger is, how far back your history runs, and whether the last time you moved insurers cost you any of it.

Send us your policy for a review

Sources

Common questions

Common questions.

What is the difference between claims-made and occurrence?

An occurrence policy covers events that happened during its term, whenever the claim is eventually made, so expired policies keep responding for years afterwards. A claims-made policy covers claims first made against you during its term, provided the event happened on or after the retroactive date, and it stops responding once it expires. Commercial general liability is usually occurrence; professional liability, D&O and cyber are usually claims-made.

What is a retroactive date?

It is the earliest date on which work or conduct can have occurred and still be covered by a claims-made policy. Anything before it is excluded outright. A business that has never let the coverage lapse should carry a retroactive date matching when that coverage first started. A policy with no retroactive date at all is called full prior acts. A lapse, or a move to an insurer that will not match it, can reset the date and uninsure everything that came before.

What happens to my retroactive date if I change insurers?

The new insurer sets it, and it is negotiated rather than automatic. The good outcome is that they match your existing retroactive date so your history carries over. The bad outcome is a date set at the new policy's inception, leaving everything you did before uninsured. Ask in writing what the retroactive date will be before accepting a claims-made quote, because it will never show up in a price comparison.

What is tail coverage?

Tail coverage, formally an extended reporting period, extends the window for reporting claims against a claims-made policy after it has expired, for work already done before expiry. It does not cover new work. It is bought as a one-off premium from the insurer you are leaving, and the option is generally only available for a limited period around expiry.

Do I need tail coverage if I retire or sell my business?

Usually yes on a claims-made policy. Claims about work you did can arrive long after you stop doing it, and once the policy expires it stops responding to anything. On a sale, a buyer will normally require run-off coverage on the seller's past acts. Raise it while the policy is still in force, because the right to buy a tail generally has to be elected within a window around expiry.

Is commercial general liability claims-made or occurrence?

Commercial general liability is normally written on an occurrence basis, which is why an old CGL policy still responds to an injury that happened while it was in force even after you have moved insurers. Some specialty liability extensions attached to a package can be claims-made, so it is worth confirming rather than assuming the whole policy shares one trigger.

What is a claims-made-and-reported policy?

A stricter form of claims-made in which the claim must be both made against you and reported to the insurer inside the policy period. A claim made near the end of the term but reported after it can fall between the expiring policy and the new one. If your form says claims-made-and-reported, reporting speed is a condition of coverage rather than good practice.

What is a notice of circumstances?

It is a report to your insurer of something that might give rise to a claim, before anyone has claimed. Most claims-made policies allow it, and once accepted the matter is tied to that policy year and covered there even if the claim itself arrives after the policy has expired. It is the main protection against losing a claim to late notice, and there is no downside to reporting something that comes to nothing.

Can I switch from a claims-made policy to an occurrence one?

Sometimes, depending on the class of coverage and what the market offers, and the switch has to be handled deliberately. An occurrence policy only covers events from its own inception forward, so everything you did while on claims-made coverage needs either a matching retroactive date somewhere or a tail on the old policy. Done without that step it leaves a gap covering your entire history.

Why do insurers use claims-made policies?

Because professional, management and cyber liability claims take years to surface: a long time can pass between the mistake and the claim. Writing them on an occurrence basis would leave insurers paying claims decades later against premiums priced on assumptions long out of date. Claims-made lets an insurer close a year, which is much of what keeps the coverage available and sensibly priced. The cost is that keeping your coverage continuous becomes your responsibility.

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