What does a discovery form apply to in the context of liability policies?

The discovery form applies to liability policies in a way that emphasizes the importance of having a reasonable belief that a covered event has occurred. This is particularly relevant for claims-made policies, where coverage is activated not just by the filing of a lawsuit or the outcome of investigations, but rather by the insured's awareness of potential liability.

In this context, the discovery form allows policyholders to have protection as soon as they identify a circumstance that could lead to a future claim, rather than waiting for a formal claim or lawsuit to be initiated. This proactive approach helps insureds mitigate risks by ensuring they are covered for claims that might emerge from incidents they are aware of, thus providing more comprehensive liability protection.

This principle is what makes understanding the nature of a discovery form critical for adjusters, as it influences how and when coverage is engaged.