Claims-Made, Retroactive Date, and the Late Report
Ridgeline Contracting buys a claims-made CGL policy effective January 1, 2022, with a retroactive date of January 1, 2022, a $1,000,000 each-occurrence limit, a $2,000,000 general aggregate, and a 60-day extended reporting period. Ridgeline completes a retaining-wall job in June 2022. In January 2025, the wall fails and injures a passerby. The injured person files suit in March 2025. Ridgeline has continuously renewed the policy with the same retroactive date and limits; the current policy period is January 1, 2025 to January 1, 2026.
1. Does the policy respond? Explain claims-made, retroactive date, and occurrence.
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Likely yes. Three tests must be met:
- Claim made during the policy period. Suit was filed in March 2025, within the January 1, 2025–January 1, 2026 policy period. If the form is claims-made-and-reported, the claim must also be reported within the policy period or a specified reporting window; the facts say only “claims-made,” so the made date controls.
- Occurrence after the retroactive date. The injury occurred in January 2025, well after the January 1, 2022 retroactive date. A retroactive date bars coverage for acts before that date; it does not bar later injury.
- Limits and coverage. Bodily injury to a passerby from completed work is potentially covered. The $1,000,000 each-occurrence limit applies to the injury; defense costs and the aggregate depend on the form. The $2,000,000 general aggregate is the ceiling for the policy period.
Judgment point: the June 2022 completion date does not defeat coverage. The retroactive date, not the completion date, is the backward boundary. The injury date is within the policy's covered window.
2. Suppose Ridgeline had canceled the policy on December 31, 2024, and the claim was filed in March 2025. What changes?
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The claim would fall outside any active policy period, so the extended reporting period becomes decisive.
- A 60-day ERP beginning December 31, 2024 runs through approximately March 1, 2025. A claim made within that window for an occurrence after the retroactive date can be covered, subject to the ERP's terms and any additional premium.
- If the suit was filed in mid-March, it is outside the 60 days and there is no coverage under that policy. The insured would have to look to another policy or defend uninsured.
- The ERP does not extend the retroactive date and does not create new limits; it extends the time to report claims for covered occurrences.
- Some ERPs are automatic, some must be purchased, and some are triggered only by cancellation or nonrenewal. The insured must confirm which applies.
Practical lesson: a claims-made insured that changes carriers or cancels must calendar the ERP and consider buying a longer tail if exposure is long-tailed, as with construction defects.
3. How would the analysis differ if the policy were occurrence-based?
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An occurrence policy is triggered by the date of injury or damage, not the date of claim.
- The January 2025 wall failure and injury would be covered by the policy in force in January 2025, regardless of when suit was filed.
- If Ridgeline had canceled on December 31, 2024, an occurrence policy in effect in January 2025 would still respond; there would be no need for an ERP.
- The retroactive date concept generally does not apply to occurrence policies, because coverage attaches at the occurrence, not at the claim.
- The trade-off: occurrence coverage is often more expensive and the insurer bears long-tail risk; claims-made coverage is cheaper but requires careful management of retroactive dates and tail coverage.
Key comparison: claims-made asks “when was the claim made?”; occurrence asks “when did the injury happen?” The same fact pattern can produce opposite results depending on which trigger applies.