Question

A commercial crime coverage form covers losses sustained and discovered only during the policy period (or within one year after the end of the policy year) is called a(n)?

A) Claims-made policy
B) Occurrence policy
C) Claims-occurrence policy
D) Occurrence-claims policy

Answer 1

The correct answer is A) Claims-made policy. This type of policy covers losses that are both sustained and discovered within the policy period or within a specified time frame after the policy ends, usually one year.

Step-by-step explanation:

A commercial crime coverage form that covers losses sustained and discovered only during the policy period (or within one year after the end of the policy year) is called a claims-made policy. This type of policy requires the loss to both occur and be reported to the insurer within the policy period or extended reporting period. It contrasts with an occurrence policy, which covers any claim for an event that took place during the policy period, regardless of when the claim is made.

For example, if a policyholder has a claims-made policy and a theft occurs within the policy period but is discovered and reported after the policy ends, they would not be covered unless it is reported within the allowable extended period, usually one year. However, with an occurrence policy, the claim would be covered because the event, the theft, occurred within the policy period.