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An occurrence policy covers incidents that happen during the policy period, no matter when the claim is filed, even years after the policy expired. A claims-made policy covers claims filed during the policy period, but only for incidents after the policy's retroactive date. General liability is usually occurrence; professional liability, D&O, and most cyber are claims-made. The difference decides whether a claim that surfaces years later is covered, which makes it one of the most expensive distinctions in commercial insurance to misunderstand.
Bodily injury is usually obvious when it happens, so occurrence forms work: the policy on the risk that day pays, whenever the suit arrives. Professional errors, board decisions, and data incidents surface slowly, sometimes years later, so carriers write those lines claims-made to keep the exposure measurable: the policy responding is the one in force when the claim is made, provided the wrongful act happened after the retroactive date. Two clocks, two different answers about which policy pays.
The retroactive date anchors how far back a claims-made policy reaches. Work performed before that date is never covered, no matter how long you keep renewing. The classic disaster is a renewal that quietly advances the retro date, erasing coverage for every prior year of work in exchange for a slightly cheaper premium. The retro date should stay anchored to the day you first bought the coverage, and verifying it should be a standing item on every claims-made renewal.
Cancel a claims-made policy, or switch carriers carelessly, and claims from past work have nowhere to land. The solutions are an extended reporting period, a tail, which keeps the old policy open to new claims for past work, or prior-acts coverage on the new policy that honors the old retro date. Selling the company, retiring, or changing carriers all trigger the tail conversation. The time to have it is before the change, because tail pricing after the fact has no competitive tension.
Professional liability and E&O, directors and officers, employment practices, fiduciary, and most cyber forms. General liability, auto, and property are occurrence-based. Mixed programs are normal, which is why the two clocks need separate tracking.
Commonly one to two times the expiring annual premium for an unlimited tail, less for shorter terms. It is priced as a multiple because the carrier is accepting all future claims from all past work in one transaction.
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