Texas All Lines Adjuster Practice Test

In a claims-made Commercial General Liability (CGL) policy, what triggers the coverage?

1. A claim

2. An occurrence

3. A written notice

4. An accident report

The correct answer is: A claim

In a claims-made Commercial General Liability (CGL) policy, coverage is triggered when a claim is made against the insured during the policy period. This is different from occurrence-based coverage, where the trigger is the date of the event that caused the damage, regardless of when the claim is filed. In the context of a claims-made policy, the essential element is that the claim must be reported to the insurer while the policy is active, which establishes a direct connection between the claim and the policy period. This means that if an incident occurred outside the policy period, but a claim related to it is made while the policy is in effect, the insurer will provide coverage as long as the claim is reported as required. Therefore, understanding the nature of claims-made coverage helps in comprehending the importance of claim reporting and timing in the context of liability insurance.