76. A farm fertilizer company has four claims-made policies with a retro-date of 1995: policy W went into effect in 1995; policy X went into effect in 1996; policy Y went into effect in 1997; and policy Z went into effect in 1998. Under a claims-made policy, if a loss occurred in 1995 generating a claim in 1997, which policy will pay the claim?
Answer: C
Policy Y (1997) will pay the claim.
In this scenario, a claim was generated in 1997 for a loss that occurred in 1995. Under a claims-made policy, coverage is only triggered if the claim is made during the policy period in effect at the time the claim is reported. Therefore, the policy that was active when the claim was made in 1997 is Policy Y.
A) W (1995)
Option A is incorrect because while Policy W was in effect during the time of the loss in 1995, it did not cover claims made after its retroactive date. The claim was made in 1997, which is outside the coverage period of this policy.
B) X (1996)
Option B is also incorrect. Policy X was in effect from 1996, but since the claim was made in 1997, this policy does not cover claims for losses that occurred prior to its effective date. Therefore, it does not apply to the claim made in 1997.
C) Y (1997)
Option C is correct because Policy Y was in effect when the claim was made in 1997. Since claims-made policies require the claim to be made during the policy period, this policy is responsible for covering the loss even though it occurred in 1995.
D) Z (1998)
Option D is incorrect as Policy Z began coverage in 1998. Since the claim was made in 1997, this policy does not apply because it does not cover any claims reported before its effective date.
Conclusion
Policy Y is the only policy that provides coverage for the claim made in 1997, fulfilling the criteria of a claims-made policy. Options A, B, and D fail to provide coverage as they either precede the claim reporting or are outside the relevant policy period. Thus, Policy Y is definitively the correct choice in this context.