Occurrence vs claims-made liability policies: retroactive dates explained with examples

An occurrence liability policy pays for injury or damage that happens during the policy period, even if the claim arrives years later. A claims-made policy pays for claims that are first made against you and reported during the policy period, provided the incident happened on or after the retroactive date shown in the schedule. Public liability policies in India are mostly occurrence-based; CGL can be either; professional indemnity, D&O and cyber policies are almost always claims-made. The practical rule: with a claims-made policy, keep cover continuous and keep the same retroactive date when you renew or switch insurer, or you may lose cover for past work.

This guide belongs to the business liability insurance overview. The trigger is one of the main differences between policy types; see CGL vs public liability and product liability cover.

The two triggers side by side

Question	Occurrence	Claims-made
Which policy responds?	The one in force when injury or damage happened	The one in force when the claim is first made and notified
Claims after the policy ends	Still covered if the event happened during the period	Not covered unless an extended reporting period applies
Retroactive date	Not used	Events before this date are excluded
Effect of switching insurer	Old policy still answers for old events	New policy must carry the old retroactive date
Typical products in India	Public liability, many CGL, employees' compensation	Professional indemnity, D&O, cyber, some CGL and product liability
Pricing in early years	Full price from year one	Often cheaper in the first years, rising as the retroactive period lengthens

Worked timeline: why the retroactive date matters

A consultancy buys professional indemnity cover on a claims-made basis (illustrative dates):

1 April 2022: first policy starts; retroactive date 1 April 2022
2022 to 2025: renewed each year with the same insurer, retroactive date unchanged
1 April 2026: switches to a cheaper insurer, which issues a policy with retroactive date 1 April 2026
August 2026: a client claims ₹35 lakh for a faulty report delivered in November 2024

The claim is made in August 2026, during the new policy, but the work was done before the new retroactive date, so the new policy excludes it. The old policy has expired, and claims-made cover does not respond to claims first made after expiry. Result: no cover, unless the old policy had an extended reporting period.

Had the new insurer agreed to keep the retroactive date at 1 April 2022, the claim would have been within cover. A few thousand rupees saved on the switch could cost ₹35 lakh plus defence costs.

Extended reporting period (ERP)

An ERP, sometimes called a discovery period, lets you notify claims for a set time after a claims-made policy ends, for incidents that happened before it ended and after the retroactive date. Typical features to check:

Automatic ERP: a short period, sometimes included at no cost if the policy is not renewed or replaced
Optional ERP: longer periods bought for an additional premium, often a percentage of the expiring premium
Conditions: often not available if you replace the cover with another policy, or if the policy was cancelled for non-payment

Businesses that close, sell up or retire need an ERP most, because claims about past work can arrive years later.

Notice of circumstances

Many claims-made policies let you notify a circumstance that may give rise to a claim, for example a client complaint or an accident, before any formal claim. If accepted, any later claim arising from it is treated as made during the policy. Before switching insurer, notify every known circumstance to the current insurer: the new insurer will normally exclude matters you knew about.

Occurrence policies: the long-tail problem

Occurrence wording sounds simpler, but some losses happen gradually. Product exposure, long-latency illness or slow water damage can make it hard to say when the "occurrence" took place, and wordings define this in different ways. Keep old occurrence policy documents permanently: they may still answer a claim decades later. Also check that the limit available under an old policy has not been eroded by earlier claims.

Decision checklist

Find the trigger on the first page of the policy wording, not only the brochure
For claims-made cover, record the retroactive date and insist it is carried forward on every renewal and switch
Ask whether a new insurer will give prior acts cover back to your original retroactive date
Notify all known circumstances before the policy ends
Price an ERP if you are closing, selling or changing activities
Keep every expired occurrence policy in a safe file
Use the liability cover checklist to record trigger and retroactive date for each quote

Mistakes at renewal are covered in more depth in renewal, lapse and retroactive date mistakes.

Frequently asked questions

Is a claims-made policy worse than an occurrence policy?

Not necessarily. It is a different tool. Claims-made cover is standard for professional risks and can be cheaper early on, but it needs continuity and careful handling of the retroactive date.

What happens if a claim is made in one year about an incident from an earlier year under occurrence cover?

The policy that was in force when the injury or damage happened responds, using its limits and terms. Notify that insurer, even if you have since switched.

Can I buy a retroactive date earlier than my first policy?

Sometimes, by declaring that you know of no claims or circumstances, but insurers decide case by case and may charge more.

Does the retroactive date apply to CGL in India?

Only if the CGL is written on a claims-made basis. Check the schedule; if a retroactive date is shown, the policy is claims-made for at least some coverage.

Sources

IRDAI — regulations on policyholder protection and policy documents
Council for Insurance Ombudsmen — complaints about policy interpretation for eligible policyholders
India Code — Insurance Act, 1938