The short version
- Occurrence: the policy in force when the incident happened pays, even if the claim arrives years later and the policy has ended.
- Claims-made: the policy in force when the claim is made and reported pays, as long as the work came after the retroactive date.
- Most professional and management policies are claims-made: E&O, cyber, EPLI, and D&O.
- Claims-made needs continuity. Keep the same retroactive date when you renew or switch, and buy a tail when you stop.
- Report fast in Washington. A Washington court enforced a claims-made policy's reporting deadline without requiring the insurer to show the late notice harmed it.
Side by side
| Occurrence | Claims-made | |
|---|---|---|
| Which policy pays | The one in force when the incident happened | The one in force when the claim is made and reported |
| Coverage after the policy ends | Yes, for incidents during the policy period | Only with an extended reporting period (tail) |
| Earlier work | Covered by the earlier policy that was in force | Covered back to the retroactive date |
| Switching insurers | Simple | Keep the retroactive date, or past work loses coverage |
| Closing or retiring | No extra purchase needed | Buy a tail |
| Common for | General liability, commercial auto liability | E&O, cyber, EPLI, D&O, some umbrellas |
The NAIC describes it the same way: under a claims-made policy, the policy in effect when the claim is reported responds, and coverage applies while the policy is in force and during any extended reporting period; an occurrence policy covers losses that occur during the policy period, even after it is canceled.
An example
A consultant delivers a project in 2024. The client discovers a problem in 2026 and makes a claim.
| Situation | Occurrence policy | Claims-made policy |
|---|---|---|
| The consultant kept the same coverage the whole time | The 2024 policy pays | The 2026 policy pays, because 2024 is after the retroactive date |
| The consultant switched insurers in 2025 and the new policy's retroactive date is 2025 | The 2024 policy pays | Not covered: the 2024 work is before the new retroactive date |
| The consultant closed the business in 2025 without a tail | The 2024 policy pays | Not covered: no policy was in force when the claim was made |
| The consultant closed in 2025 and bought a three-year tail | The 2024 policy pays | Covered, because the claim came within the tail |
Retroactive date and prior acts
The retroactive date is the earliest date of work a claims-made policy covers. A market study prepared for Washington's Office of the Insurance Commissioner describes it as the earliest date of acts for which claims made during the policy will be covered. The same study warns that an organization whose insurer leaves the market may find new coverage only without prior acts, and that a tail from the departing insurer is not always available.
When you switch insurers, ask the new insurer to match your existing retroactive date. That is often called prior acts coverage.
Tail coverage (extended reporting period)
A tail extends the time to report claims after a claims-made policy ends, for work done before it ended and after the retroactive date. You usually need one when you:
- Close, sell, or merge the business
- Retire or stop practicing
- Switch to a policy that will not honor your retroactive date
Some contracts require it. Washington's statewide IT contract 14822 requires claims-made coverage to stay in place for at least three years after the contract ends, and Idaho Department of Education solicitations require a 24-month tail or a qualifying retroactive date. Idaho's real estate E&O rule requires at least a 90-day extended reporting period. How long a tail you need depends on how long claims can arrive: in Washington, a negligence claim generally must be filed within three years, and courts often start that clock when the client discovers or should have discovered the problem; in Idaho, a malpractice claim against a licensed professional generally has two years from the act, once some damage has actually occurred; and claims on a written contract can run longer (six years in Washington, five in Idaho).
Washington's claims-made notice rule
Washington usually requires an insurer to show it was harmed before denying coverage for late notice. That rule did not save the insured in Safeco Title Insurance v. Gannon (1989). The claim was first made after his claims-made policy had expired. He had known about the problem while the policy was in force but did not give the insurer written notice before it ended, and the Court of Appeals held the insurer did not have to show harm to deny coverage. Report claims, and circumstances that could become claims, as soon as you learn of them.