Loss Sustained coverage refers to an insurance policy that covers losses during the policy period, regardless of when the loss is discovered. For instance, imagine your fence contracting business suffers a theft of equipment, but you only discover it months later. If the theft occurred during the active policy period, Loss Sustained coverage would apply.

On the other hand, Loss Discovered coverage is relevant when a loss is discovered during the policy period, even if the actual loss happened previously. Let’s say you own a roofing business, and you discover an employee embezzlement case that started years ago but continued into your current policy period. Under Loss Discovered coverage, this loss would be covered.

Choosing the right type of coverage depends on the nature of your business and the risks you face. Loss Sustained coverage is often preferred for ongoing risks, while Loss Discovered can be crucial for uncovering historical losses.

Understanding these terms helps ensure that your business is adequately protected against various risks, enabling you to focus on growth and stability in a competitive industry.