Date of discovery
Category: Claims and policy principles · Reviewed by the Apex broking team · Last reviewed 2026-08-22 · ~4 min read
Category: Claims and policy principles
Also known as: discovery basis, discovery trigger, discovered during the period of insurance
Related concepts: trigger clause, claim made
Definition
A discovery-basis wording covers loss discovered during the period of insurance, whenever the act causing it occurred (subject to any retroactive limit). The policy therefore turns on knowledge rather than on events or on the service of a claim. Typical wordings define discovery as the point at which a specified officer or manager first becomes aware of facts that would cause a reasonable person to assume that a loss covered by the policy has been or will be incurred — even if the amount, the cause or the identity of the wrongdoer is not yet known.
How it differs from the other two triggers
An occurrence policy responds to injury or damage happening during the period, whenever the claim is made. A claims-made policy responds to a claim first made against the insured during the period, whenever the act occurred — the structure explained under claim made and set out generally in trigger clause. A discovery policy responds to neither: it responds to the insured’s own realisation. That is a rational design for dishonesty risks, because employee fraud is characteristically concealed and may run undetected for years, so an occurrence trigger would leave the loss attached to a policy year the insured cannot identify and may no longer be able to prove.
What counts as discovery
Three points recur in wordings and in disputes. First, the threshold is objective: awareness of facts from which a reasonable person would conclude a loss has been or will be incurred, not proof or certainty. Second, it is knowledge held by defined people — usually directors, partners, risk or compliance officers — not by any employee, and certainly not by the dishonest employee. Third, once discovery occurs the policy in force at that moment is the one engaged, and subsequent policies typically exclude losses discovered earlier. Suspicion that turns out to be well founded can therefore fix the trigger date earlier than the insured would like.
Prior acts, retroactive dates and continuity
Because the loss may have begun long before the current policy, discovery wordings usually contain a prior-acts or retroactive provision limiting how far back the causative conduct may go, and often a “loss sustained” or superseded-policy clause dealing with continuous cover across successive years and successive insurers. Where cover has been continuous, these clauses knit the years together so a long-running fraud is not split; where there has been a gap or a change of insurer without continuity wording, the gap can be fatal. The concept is closely related to the retroactive date in claims-made cover, though the mechanics differ.
Notification consequences
Discovery-basis policies pair the trigger with a tight notification obligation — commonly notice as soon as practicable after discovery, with a proof of loss to follow within a stated period. Delay is more dangerous here than on a claims-made policy, because the insured is not waiting for a third party to act; the clock starts with the insured’s own knowledge, and the insurer will ask when that knowledge was first held and by whom. Contemporaneous records of who knew what, and when, are the practical answer.
Where you meet it
Discovery triggers are standard in commercial crime insurance and fidelity wordings, in some computer crime and funds-transfer covers, and occasionally in bespoke financial institution wordings. Professional indemnity is not written on this basis: PI is claims-made, with circumstance notification providing the forward-looking mechanism instead.
Why it matters
Because the trigger date determines which policy, which limit and which excess apply, and because the insured controls it only up to a point. Once a director has facts that would make a reasonable person suspect a loss, the year is fixed. Businesses that run internal investigations for months before telling insurers frequently find they notified the wrong year, or notified late in the right one.
Frequently asked questions
Is discovery the same as claims-made?
No. A claims-made policy responds to a claim first made against the insured during the period. A discovery policy responds to the insured’s own discovery of a loss during the period, whether or not anyone has made a claim.
Does discovery require proof that a loss has happened?
Usually not. The typical test is awareness of facts that would cause a reasonable person to assume a covered loss has been or will be incurred, even if the amount and the wrongdoer are still unknown.
Whose knowledge counts?
The wording will name the relevant people — commonly directors, partners or designated officers. Knowledge held by the dishonest employee does not start the clock, which is why the definition is drafted around senior roles.
Related entries
This entry is part of the Apex Insurance Wiki. Last reviewed 2026-08-22. Next review: 2027-02-22. It is general insurance information, not legal advice, and it describes UK market practice and law as at August 2026.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.