10.2 Commercial General Liability Coverage Forms
A Commercial General Liability (CGL) policy provides important coverage for many legal liability exposures faced by commercial risks. The CGL may be written as a stand-alone policy or included as a coverage part within a Commercial Package Policy (CPP). CGL coverage and other commercial liability coverages may be written using one of two coverage forms: an Occurrence Form or a Claims-Made Form. The form used determines how and when coverage is triggered under the policy.
The Occurrence Form and the Claims-Made Form are similar in most respects. The primary difference is the point at which coverage is triggered, or activated, under the policy. This is known as the coverage trigger. Under an Occurrence Form, coverage is triggered by the date the occurrence, or loss, takes place. Under a Claims-Made Form, coverage is triggered by the date the legal claim is made against the insured and reported according to the policy requirements.
Occurrence Form
The Occurrence Form is the most commonly used Commercial General Liability (CGL) coverage form. Under this form, coverage applies to bodily injury or property damage that occurs during the policy period, regardless of when the claim is later made against the insured. The coverage trigger under an Occurrence Form is based on a single question:
Step 1: Did the bodily injury or property damage occur during the policy period?
If the answer is yes, coverage is triggered. This means the policy may respond to a covered claim even if the claim is not made until after the policy has expired, as long as the injury or damage occurred during the policy period.
Example
A customer slips on a wet floor in a retail store and falls, resulting in bodily injury. Two years later, the customer sues the store for damages. The Occurrence Form CGL policy that was in effect on the date of the injury would respond to the claim. This is true even if the policy was later terminated before the customer filed the lawsuit, because the bodily injury occurred during the policy period.
Claims-Made Form
To reduce the insurer’s exposure to claims that may be reported long after a loss occurs, a general liability policy may be written on a Claims-Made Form. Under this form, coverage is more restrictive because both the occurrence and the notice of the claim must take place within specific time requirements. For coverage to apply, the loss must occur on or after the policy’s retroactive date and before the policy expires. In addition, the claim must be made against the insured during the policy period or during an applicable extended reporting period. Determining whether coverage is triggered under a Claims-Made Form generally involves a two-step process:
Step 1: Did the bodily injury or property damage occur on or after the retroactive date and before the policy expiration date?
Step 2: Was the claim made against the insured during the policy period or during an applicable extended reporting period?
If the answer to both questions is yes, coverage is triggered under the Claims-Made Form. If either answer is no, the claim generally will not be covered.
Under a Claims-Made Form, a claim is considered made when notice of the legal claim is received and recorded by either the insured or the insurer. When multiple claims involve bodily injury sustained by the same person, all related claims are treated as having been made at the time the first claim was made against any insured. This rule helps determine whether the claim was made within the policy period or an applicable extended reporting period.
Because the Claims-Made Form provides a more limited coverage period than the Occurrence Form, it may be a more affordable option for some insureds. The lower cost reflects the trade-off: coverage is available only when the loss and the claim meet the form’s specific timing requirements. For insurers, the Claims-Made Form helps reduce the uncertainty created by claims that may be reported long after a policy has expired. By limiting how long claims may be reported, the insurer can better predict its claim obligations and protect its financial stability.
Retroactive Date
The retroactive date is the earliest date on which an injury or damage may occur and still be eligible for coverage under a Claims-Made Form. If the injury or damage occurs before the retroactive date, the claim is not covered, even if the claim is made during the policy period. The retroactive date may be the same as the policy’s effective date. In some cases, the insurer may agree to use an earlier date, such as the effective date of the insured’s first Claims-Made policy, provided the insured has maintained continuous coverage. This allows coverage to apply to eligible losses that occur after the retroactive date and are later reported during the policy period or an applicable extended reporting period.
The primary purpose of a retroactive date is to prevent adverse selection. Without a retroactive date, a business or other legally liable party might attempt to purchase insurance after becoming aware of an injury, damage, or incident that could lead to a claim. By establishing the earliest date on which an occurrence may take place and still be covered, the retroactive date helps ensure that the Claims-Made Form does not cover known or preexisting losses. The retroactive date is shown on the Commercial General Liability (CGL) Declarations page.
Example
A hardware store purchases a new Claims-Made Commercial General Liability (CGL) policy for the policy period of January 1, 2020, to January 1, 2021. The store previously maintained continuous CGL coverage with another insurer for the five years before the new policy began. Because there was no gap in coverage, the new insurer agrees to a retroactive date of January 1, 2015.
A claim is made against the store on June 30, 2020, for an occurrence that took place on March 15, 2019. This claim would be covered by the new policy because both timing requirements are satisfied: the occurrence took place after the retroactive date, and the claim was made during the policy period.
A different claim is made against the store on August 4, 2019, for an occurrence that took place on March 15, 2019. This claim would not be covered by the new policy. Although the occurrence took place after the retroactive date, the claim was made before the new policy period began. Coverage, if available, would generally fall under the policy in effect when the claim was made.
Another claim is made against the store on November 25, 2020, for an occurrence that took place on April 1, 2010. This claim would not be covered by the new policy. Although the claim was made during the policy period, the occurrence took place before the policy’s retroactive date.
Prior Acts Coverage
The retroactive date limits how far back in time an occurrence may take place and still be eligible for coverage under a Claims-Made Form. However, an insured may be able to obtain broader protection by purchasing Prior Acts coverage. Prior Acts coverage may extend coverage to earlier occurrences by moving the retroactive date further into the past or, in some cases, removing the retroactive date entirely. When the retroactive date is removed, coverage may apply to prior occurrences, provided the claim is made during the policy period or during an applicable extended reporting period and is not otherwise excluded.
Extended Reporting Periods (Tail Coverage)
An extended reporting period allows claims to be reported after the end of a Claims-Made Commercial General Liability (CGL) policy period. However, the occurrence that gives rise to the claim must still meet the policy’s timing requirements. The injury or damage must have occurred on or after the retroactive date and before the policy expired. An extended reporting period does not change the policy’s coverage, limits of insurance, or policy period. It simply extends the amount of time the insured has to report a claim after the policy ends.
The extended reporting period under a Claims-Made Commercial General Liability (CGL) policy is activated when certain events occur that could otherwise leave the insured without a way to report claims after the policy ends. The extended reporting period may apply if:
- The CGL policy or CGL coverage part is terminated, cancelled, or not renewed; or
- The CGL policy or coverage part is renewed or replaced with other CGL insurance that:
- Has a retroactive date later than the retroactive date shown on the original policy’s CGL Declarations page; or
- Does not provide CGL coverage on a Claims-Made basis.
In these situations, the extended reporting period protects the insured’s ability to report claims after the policy ends, as long as the claims arise from occurrences that took place during the required coverage period.
Example
Great Store has a Claims-Made Commercial General Liability (CGL) policy with Insurer A. The policy’s retroactive date is January 1, 2020, which is also the policy effective date.
One year later, Great Store replaces the policy with another Claims-Made CGL policy through Insurer B. The new policy also has a retroactive date of January 1, 2020.
Because both policies have the same retroactive date, there is no gap in coverage for prior occurrences. As a result, the extended reporting period under Insurer A’s policy is not activated.
If a covered claim is made against Great Store for an occurrence that took place on June 30, 2020, the claim would be handled under Insurer B’s policy, assuming the claim is made during Insurer B’s policy period and all other coverage requirements are met. Although Insurer B’s policy was not in effect on the date of the occurrence, the occurrence happened after Insurer B’s retroactive date, so the timing requirement for the occurrence is satisfied.
Once an extended reporting period has been activated, it cannot be cancelled. This means the insured retains the right to report qualifying claims during the extended reporting period, subject to the policy’s terms and conditions.
Basic Extended Reporting Period (BERP)
The basic extended reporting period is automatically included in the Claims-Made Form. It gives the insured additional time after the policy period ends to report certain claims and still qualify for coverage. Standard Claims-Made Forms generally provide a 60-day basic extended reporting period, often called a mini-tail. This period applies to claims arising from occurrences that took place on or after the retroactive date and before the end of the policy period, as long as the claim was not previously reported to the insurer.
Note
The Conditions section of a CGL policy requires the insured to notify the insurer of any occurrence or offense that may result in a claim. However, a claim may not always be made or reported before the policy period ends. If a covered occurrence took place during the policy period and the claim was not previously reported, the basic extended reporting period, or mini-tail, gives the insured 60 additional days after the policy ends to report the claim.
If an occurrence is reported to the insurer during the policy period or during the 60-day basic extended reporting period, the BERP provision provides additional time to report claims that arise from that reported occurrence. This additional reporting period lasts for 5 years and is sometimes called the midi-tail. The midi-tail runs at the same time as the mini-tail, rather than after it. It may be especially useful when a single reported occurrence results in multiple claims that are made over time.
The loss itself must still meet the Claims-Made Form’s timing requirements. This means the bodily injury or property damage must occur on or after the retroactive date and before the end of the policy period. The extended reporting period only extends the time allowed to report a claim; it does not extend coverage to losses that occur after the policy expires.
Supplemental Extended Reporting Period (SERP)
The supplemental extended reporting period, also called the maxi-tail, is an optional extended reporting period that may be purchased by the insured. Unlike the basic extended reporting period, the maxi-tail provides an unlimited amount of time to report qualifying claims. This reporting period applies to claims arising from occurrences that took place on or after the retroactive date and before the end of the policy period. If these timing requirements are met, the claim may be reported at any time after the policy ends, subject to the policy’s terms and conditions.
The Supplemental Extended Reporting Period (SERP) may be purchased by endorsement if the insured requests it during the policy period or within 60 days after the policy ends. The cost may be up to 200% of the CGL policy’s annual premium. The SERP premium is a one-time charge and is fully earned when the endorsement is issued. Once added, the SERP cannot be cancelled, and no premium refund is provided.
Claims Covered by the CGL Coverage Forms
| Occurrence Form | Claims-Made Form | |
|---|---|---|
| When must the occurrence happen? | During the policy period | Between the retroactive date and the end of the policy period |
| When must an occurrence or loss that might result in legal action be reported to the insurer? | As soon as practicable after it took place | As soon as practicable after it took place |
| When must the legal action (claim) be made against the insured? | Anytime | During the policy period or during the extended reporting period |
| When must the legal action be reported to the insurer? | Anytime, as soon as practicable after the claim is made | During the policy period or during the extended reporting period, as soon as practicable after the claim is made |
Note
The retroactive date and extended reporting periods apply only to the Claims-Made Form. They do not apply to the Occurrence Form because coverage under the Occurrence Form is triggered by the date the bodily injury or property damage occurs.
Policy Sections
Both Commercial General Liability (CGL) coverage forms are organized into the same major policy sections. These sections help the insured understand what is covered, who qualifies as an insured, how much coverage is available, the duties and conditions that apply, and the meaning of key policy terms.
The main sections of the CGL coverage forms are:
- Section I – Coverages
- Section II – Who Is An Insured
- Section III – Limits of Insurance
- Section IV – Commercial General Liability Conditions
- Section V – Definitions