Question 5

The major difference is the coverage trigger.

The key distinction between occurrence and claims-made versions of the Commercial General Liability (CGL) coverage form lies in their coverage trigger. The occurrence form provides coverage for incidents that occur during the policy period, while the claims-made form provides coverage for claims made during the policy period, regardless of when the incident occurred.

A) Amount of aggregate limits provided

While the aggregate limits may vary between policies, this is not the primary difference between occurrence and claims-made coverage forms. Both forms can have similar aggregate limits; thus, this option does not accurately represent the major difference.

B) Coverage trigger

This option is correct as the fundamental difference is indeed the coverage trigger. The occurrence policy covers claims based on when the event occurred, while the claims-made policy covers claims based on when the claim is reported, which significantly affects coverage and risk management strategies.

C) Policy term permitted

Both occurrence and claims-made policies can have similar policy terms, and neither is inherently limited in this aspect. Hence, the term allowed for the policy does not constitute a major difference between the two forms.

D) Exclusions

While exclusions may differ between specific policies, they are not the defining factor that distinguishes occurrence from claims-made coverage. Both types of policies can have a variety of exclusions, making this option inaccurate in the context of the primary difference.

Conclusion

The distinction of the coverage trigger is essential in understanding the implications of each policy type. Occurrence coverage responds to events as they happen, while claims-made coverage is contingent on the timing of the claim, which significantly impacts liability management for businesses. Thus, option B is definitively the correct answer, as it accurately highlights the core difference that affects how coverage is applied.