Difficulty: Easy

Average Score: 79%

In the Loss Sustained version of the Commercial Crime policy, the discovery period permits payment for losses discovered

Rationale

In the Loss Sustained version of the Commercial Crime policy, the discovery period permits payment for losses discovered during the policy period and for up to only one year after the policy expires.

The Loss Sustained version allows claims for losses that are discovered both within the active policy period and for a specified duration of one year following the expiration of the policy. This provision ensures that insured parties can still claim for losses that may not have been recognized until after the policy has ended.

A (only during the policy period) YOUR ANSWER

This statement is incorrect because the Loss Sustained version explicitly extends the discovery period to cover losses found up to one year after the policy expires. Therefore, it does not limit the payment to just the duration of the policy.

B (during the policy period and for up to only one year after the policy expires) CORRECT

This option correctly describes the terms of the Loss Sustained version of the Commercial Crime policy, which specifically allows for claims made during the policy and for one additional year thereafter, accommodating any delayed discovery of losses.

C (during the policy period and for one year after the policy expires, and even thereafter provided no other policy covers the same loss) YOUR ANSWER

This choice is incorrect because it inaccurately suggests an indefinite extension of the discovery period based on the absence of coverage under another policy. The Loss Sustained version strictly limits the time frame for claims to one year after expiration.

D (during any period selected by the insured even if not specified in the Declarations) YOUR ANSWER

This statement is misleading as it implies flexibility in selecting the discovery period, which is not a feature of the Loss Sustained version. The policy clearly defines the time frames for loss discovery and does not allow arbitrary selection by the insured.

Conclusion

The Loss Sustained version of the Commercial Crime policy delineates a defined discovery period that allows for claims during the active period and an additional one year post-expiration. Option B accurately reflects this structure, ensuring coverage for potential losses that may not be immediately apparent. The other options misrepresent the terms of the policy, emphasizing the importance of understanding specific provisions in insurance contracts.

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