A farm fertilizer company has four claims-made policies with retro-dates W1995, X1996, Y1997, Z1998. If a loss occurred in 1995 and a claim is made in 1997, which policy will pay this claim?

• A. W (1995)
• B. X (1996)
• C. Y (1997)
• D. Z (1998)

Answer: (C)

In claims-made policies, coverage depends on when the claim is made and the policy’s retroactive date. The retroactive date sets the earliest date an act can occur and still be covered; acts before that date aren’t covered, even if a claim is filed later.

Here, the loss happened in 1995 and the claim is filed in 1997. To cover the 1995 incident, the policy must have a retroactive date of 1995 or earlier. Of the given options, only the policy with the 1995 retroactive date qualifies. Policies with retro dates of 1996, 1997, or 1998 would not cover a 1995 incident, even though the claim is made in 1997, because the underlying act occurred before their retroactive dates.

Therefore, the policy with the 1995 retroactive date would pay the claim.