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.
| 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.
Checked against
- CSLB — Limited Liability Company (LLC) licencesread 2026-09-04
Not legal advice. Fees, bond amounts and deadlines are set by statute and change without notice — confirm with the board that issues your licence before you file.