Question 76

Policy Y (1997) will pay the claim.

Under a claims-made policy, coverage is triggered by a claim made during the policy period for losses that occurred after the retroactive date. Since the claim was made in 1997 for a loss that occurred in 1995, it falls under the coverage of policy Y, which was in effect for claims made in 1997.

A) W (1995)

Policy W, which went into effect in 1995, would not pay the claim because it is a claims-made policy. Claims must be made during the effective period of the policy; thus, while W covers losses occurring after its retroactive date, it cannot cover a claim made in 1997.

B) X (1996)

Policy X became effective in 1996, but it also operates as a claims-made policy. Similar to policy W, it cannot cover a claim made in 1997 for a loss that occurred in 1995, as it does not provide coverage for claims made after its effective period.

C) Y (1997)

Policy Y is the correct answer because it was in effect when the claim was made in 1997, covering losses that occurred after its retroactive date. This policy fulfills the requirement of being active during the claim's reporting period, ensuring coverage for the claim generated from the 1995 loss.

D) Z (1998)

Policy Z, which went into effect in 1998, would not be applicable since it covers claims made after its effective date. As the claim was made in 1997, it falls outside the coverage period of policy Z, which cannot address losses that occurred prior to its inception.

Conclusion

Policy Y (1997) is the only policy that provides coverage for a claim made in 1997 for a loss that occurred in 1995, as it was active during the claim's reporting period. All other options fail to provide coverage because they either do not encompass the claim period or were not in effect when the claim was made.