Two policies can have the same limit and still respond to completely different claims, because the trigger decides which year of coverage answers. Here is how the two triggers work and why professional firms carry a mix of both.
What occurrence coverage does
An occurrence policy generally responds to incidents that happen during its policy period, no matter when the claim shows up. If something went wrong while the policy was in force, that year of coverage generally answers, even if the claim arrives years later after you have moved on to a different carrier. Most general liability is written this way. Once a policy period closes, the coverage for that period is generally locked in.
What claims-made coverage does
A claims-made policy generally responds based on when the claim is first made against you, not when the work was done. The policy in force at the time of the claim is the one that answers, subject to its retroactive date. Most E&O and professional liability is written this way. That means your current policy, and the unbroken chain behind it, is what protects your past work.
Why the two lines split this way
Professional mistakes often stay hidden for a long time. A missed detail in a report or a bad recommendation may not surface until a project fails years later. Claims-made pricing tracks claims as they are reported, which fits that long tail. General liability tends to cover events like a slip or property damage that are usually obvious when they happen, so occurrence coverage fits it well. Neither approach is better. They are built for different kinds of risk.
The continuity difference
This is the practical part. With occurrence coverage, once a year closes you generally do not have to think about it again. With claims-made coverage, continuity is the asset. The retroactive date sets how far back covered work reaches, and a lapse can break the chain and drop protection for past work. When you switch carriers, you generally protect the past two ways: prior acts coverage on the new policy that picks up the old retro date, or tail coverage on the departing policy. We cover those choices in nose coverage vs tail coverage.
Which one fits
You usually do not choose. Most professional firms carry occurrence general liability and claims-made E&O at the same time, because each line is priced and structured for the risk it covers. The decision that matters is not picking a trigger, it is managing the claims-made side well: knowing your retro date, avoiding lapses, and handling carrier switches so your past work stays covered.
Questions to ask your advisor
- How does each of my current policies trigger, occurrence or claims-made?
- What is my retroactive date on my E&O, and how far back does it reach?
- Has my claims-made coverage been continuous, with no gaps?
- If I switch E&O carriers, do we use prior acts or a tail to protect the past?
- Am I comparing quotes on limit and price without checking the trigger?
The trigger is the quiet detail that decides which policy responds. Occurrence coverage locks in the year the event happened. Claims-made coverage depends on the policy in force when the claim arrives and the continuity behind it. Knowing the difference is what keeps your past work from falling through a gap you did not know was there.
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