What is the difference between claims-made and occurrence insurance policies?

Insurance policies use one of two trigger mechanisms to determine when coverage applies. Understanding the difference is important because it affects whether a claim is covered.

An occurrence-based policy covers bodily injury or property damage that occurs during the policy period, regardless of when the claim is actually filed. If a tenant is injured due to a property defect in 2025 but does not file a lawsuit until 2027, the 2025 occurrence policy responds because the injury occurred during its policy period. Most commercial property and general liability policies for apartments are written on an occurrence basis. The standard ISO CGL form (CG 00 01) is an occurrence-based policy form and is the most widely used liability form for apartment buildings.

A claims-made policy covers claims that are first reported during the policy period, regardless of when the underlying incident occurred (subject to a retroactive date). If the same injury occurred in 2025 but the claim was not filed until 2027, the claims-made policy in effect in 2027 would need to respond (assuming the retroactive date predates the injury). Pollution liability, cyber liability, and professional liability policies are commonly written on a claims-made basis. The ISO claims-made CGL form (CG 00 02) provides the standard template for claims-made liability coverage.

With claims-made policies, maintaining continuous coverage is critical. If you cancel a claims-made policy, you lose coverage for claims filed after cancellation, even for incidents that occurred while the policy was in force. An extended reporting period (sometimes called tail coverage) can be purchased to address this gap.