Code Fix and Issue Identification

Vertafore builds policy administration software for insurance agencies, and QA engineers there are expected to read production code, not just click through test cases. You are handed a method from the premium discount calculator that a developer says "should be working," but QA keeps finding wrong numbers on regression runs.

public class DiscountCalculator {

    public static double applyDiscounts(List<Policy> policies) {
        double total = 0;
        BufferedReader reader = null;
        try {
            reader = new BufferedReader(new FileReader("discount_rules.txt"));
            for (int i = 0; i <= policies.size(); i++) {
                Policy p = policies.get(i);
                double discount = 0;
                if (p.getType() == "MULTI_POLICY") {
                    discount = 0.15;
                } else if (p.getType() == "LOYALTY") {
                    discount = 0.10;
                }
                total += p.getPremium() - (p.getPremium() * discount);
            }
        } catch (IOException e) {
        }
        return total;
    }
}

Walk through this method line by line and explain every issue you find, including any that would only show up intermittently in production. Describe the runtime impact of each before you say how you would fix it.