When does insurance coverage end?

Answer 1

Insurance coverage may end upon the happening of one or more of several events:

1. If the policy is issued for a specific period of time (called a "term"), it expires at the end of the term;

2. If the premium if not paid as agreed. The premium is the amount of money that the policyholder pays to the insurer in return for providing insurance. The policy may provide for a "grace period", such as 30 days from the ordinary due date of the premium within which to make the premium payment. If payment is not made by that date, the coverage usually expires.

3. The insurer may terminate coverage if it discovers that the insured, in his/her/its application for the insurance policy misrepresented a material fact. Stated otherwise, if the insurer determines that the insured gave information that was material to its decision as to whether or not to issue the policy, it may seek the early termination of coverage. If the termination of coverage is for this reason, a lawsuit often ensues for the court to determine whether the termination was proper. The technical terminology for this sort of termination of coverage is "rescission" of the policy.