What must occur for a policy to pay for a loss?

For a policy to pay for a loss, it is essential that the loss is both sustained and discovered during the coverage term. This means that the event leading to the loss must take place while the insurance policy is active, ensuring that the policy is in force and able to cover the damages incurred.

If the loss is sustained during the coverage period but discovered after the policy has ended, the policy cannot cover that loss, as coverage is linked to the policy's active status. Similarly, a loss that is discovered long after it has occurred, outside the time frame of coverage, also falls outside the insurer’s responsibilities.

Additionally, the requirement for the loss to be reported by an employee is not universally applicable, as the reporting process can vary depending on the type of insurance and the terms of the policy. Therefore, the key is that both the occurrence and discovery of the loss must happen within the active coverage term for the policy to provide compensation.