Occurrence vs claims-made policies

Checked 2026-09-04, 5 min read

Verdict

Occurrence cover responds to when the damage happened, whenever the claim arrives.
Claims-made responds only while the policy is live, and needs tail cover once it is not.
Construction claims surface years later, so a general contractor's subcontract will normally require occurrence.

Embossed relief of two dashed timelines, a red wax seal on the upper one and a blue ribbon marking the break in the lower one — Two timelines, both drawn in dashes — the ribbon marks where one of them breaks.

Occurrence against claims-made
Item	Occurrence	Claims-made
Trigger	When the injury or damage happened	When the claim is first made
Policy must be live	On the date of the damage	On the date of the claim
After you cancel	Still responds to past damage	Stops responding unless tail is bought
Retroactive date	Not applicable	Critical — losses before it are excluded
Tail / extended reporting	Not needed	Needed, and priced separately
First-year premium	Higher	Lower
Usual construction requirement	Required by most subcontracts	Often refused

§ 1Why the trigger matters in construction

Construction defects are slow. Water finds its way in over a season; a foundation settles over years; a defective flashing detail becomes a claim three winters after handover. By the time the claim arrives, the job is long finished and the policy that was in force during the work may have been replaced twice.

Occurrence cover looks at the date of the damage. If the policy was live then, it responds now. Claims-made looks at today: if the policy is gone, so is the cover, unless you bought tail cover when you left.

§ 2The retroactive date

A claims-made policy carries a retroactive date, and anything that happened before it is excluded. Switching carriers resets that date unless the new carrier agrees to carry the old one forward — and a switch that quietly resets it deletes years of past exposure from cover.

The cheapest claims-made quote is often the one with a fresh retro date.

Check that date before you compare premiums. A policy that excludes everything you built before this month is not comparable with one that does not.

§ 3Tail cover

Extended reporting — tail — lets you report claims after a claims-made policy ends, for a defined window. It is bought once, at the end, and it is not cheap: a substantial multiple of the annual premium is normal.

That cost is the real comparison. A claims-made policy that saves money each year and then demands a large tail payment at retirement or sale has not saved anything; it has deferred the bill to the least convenient moment.

§ 4What to do

For general liability, buy occurrence, and read the certificate to confirm which one you have — the form is named on it. Claims-made is normal and often unavoidable for professional liability, where the design work sits; there, plan the tail from day one.

Our certificate guide shows where the form is named, and the general liability guide covers the completed-operations aggregate these claims are paid from.

Which contractors need a claims-made professional policy at all is covered in general vs professional liability.

Checked against

CSLB — Limited Liability Company (LLC) licensesread 2026-10-18

Not legal advice. Fees, bond amounts and deadlines are set by statute and change without notice — confirm with the board that issues your license before you file.