Alternative Solutions, Inc.

The Life Cycle of an Insurance Policy (Part 2)

Alright – so last time we journeyed over to our insurance agent, found the best rate for whatever policy we needed and successfully activated our insurance policy. Congratulations! But… now what? 

Once a policy is active, you (the insured) can request changes made to your policy at any time during the policy term! Simply contact your agent, who may be able to make changes themselves through the company’s website, or they may need to submit a request. 

You also have the right to cancel your policy anytime during your term. Your agent will obtain a signed cancellation and have the policy canceled for you.  Once the cancellation is processed the policy will become inactive on the cancellation effective date and coverage will end (and the cycle stops).  

If your policy is not canceled, it will eventually come up for renewal and the insurance company can decide whether to offer you a renewal. Occasionally a risk is unacceptable or too high, and it will be non-renewed.  If the risk is still acceptable, the renewal offer will be issued and sent to you 35-75 days prior to the expiration date (depending on the state-mandated timeframe for renewals). This gives you time to decide if you want to accept the renewal or find coverage elsewhere.   

If you decide to accept the renewal and premium for the renewal, you’ll make a payment for the renewal and that will provide coverage into the new term. Easy peasy! The cycle will continue until the policy is canceled or there is a lapse in coverage and the policy becomes inactive.   

If you decide to not accept the renewal, you don’t have to make a payment and the coverage will end on the expiration date of the policy.  The policy will go inactive, and the cycle will stop.  You will be responsible for finding replacement coverage.  Your agent will receive notification of the lapse and may reach out to you to let you know the policy lapsed and will ask if you have other coverage.   

During this policy term cycle, a claim may happen, and you’ll need to file a claim. You can call your agent who will notify the insurance company, or you can call the insurance company directly to file a claim.  The person taking the call will get all the details about the loss and log the information into their claims system.  A claims adjuster will be assigned to the claim and will investigate to try and determine the cause of the loss.  The adjuster will review the coverages on the dec page and policy forms to determine if the loss is covered.  If the loss is covered, they will figure out how much will be paid on the claim, minus your deductible.   

As long as there is an active policy, this is the lifecycle that will happen over and over again, until the policy lapses or is cancelled.