Occurrence vs. Claims-Made Coverage and Triggers of Coverage
Occurrence policies respond to injury or damage that occurs during the policy period, regardless of when the claim is made. Claims-made policies respond to claims first made during the policy period, often with a retroactive date and an extended reporting period (tail). Claims-made-and-reported forms require both the claim and the report within the period. Candidates must know the difference between a retroactive date (claims-made) and a prior-acts exclusion, and between an extended reporting period (tail) and a discovery period.
Trigger theories matter for latent injury and continuous exposure. The exposure trigger activates the policy in force when the claimant was exposed. The manifestation trigger activates the policy when the injury becomes apparent. The injury-in-fact trigger activates the policy when actual injury occurs. The continuous trigger activates every policy from exposure through manifestation. Courts vary by jurisdiction, so questions may ask which theory applies rather than which policy pays.
Traps: assuming a claims-made policy covers claims made after expiration without a tail; confusing the retroactive date with the policy inception date; and forgetting that occurrence policies can respond to claims made years later if the injury occurred during the policy period.
Rule of thumb: occurrence looks at when the injury happened; claims-made looks at when the claim was made. Worked example: a manufacturer made a product in 2018 under an occurrence policy. A claimant is injured in 2019 and sues in 2022. The 2018 occurrence policy responds because the injury occurred during its period. If the manufacturer had a claims-made policy with a 2018 inception and a 2020 retroactive date, a claim first made in 2022 for a 2019 injury would be covered because the injury postdates the retroactive date and the claim was made during the policy period.