Question

Rise & Shine Light Bulb Co. has a claims-made & reported policy that is about to expire, but a customer just filed a liability claim against the company. If Rise & Shine wants to have insurance pay for the damages, it must do which of the following?

A. Rise & Shine must report the claim as soon as possible, even if that means it makes the report after the policy expires.
B. Rise & Shine must report the claim before its policy expires.
C. Rise & Shine is ineligible for coverage unless it has already requested a renewal of its policy in writing.
D. Rise & Shine may report the claim at any point for two years after the policy's expiration date.

Answer 1

Rise & Shine Light Bulb Co. should report the liability claim as soon as possible, as their claims-made & reported policy requires claims to be made and reported during the policy period, although reporting can be done after the policy expires within the grace period.

Step-by-step explanation:

If Rise & Shine Light Bulb Co. has a claims-made & reported policy that is about to expire, and a liability claim is filed against them, the appropriate action would be A. Rise & Shine must report the claim as soon as possible, even if that means making the report after the policy expires.

The nature of a claims-made & reported policy is such that it only covers claims that are made and reported during the policy period. However, if the claim is indeed made during the policy period, the report can be lodged even after the expiration of the policy, provided this is done within the grace period allowed by the policy for reporting, which generally follows immediately after the policy period.