Can you explain the differences between insurance renewal and insurance reinstatement?

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Asked June 27, 2015

1 Answer

There is a tremendous difference between a policy being reinstated and having your insurance policy renewed. In the first instance, the policy is effectively being rewritten, while renewal of a policy means that the same policy is being extended for another period of time, usually 6 months or 1 year, depending on the issuer and type of policy.

All insurance policies, with the exception of permanent life insurance, are written to cover a specific period of time. If you want to continue the coverage after that, you will need to renew the policy. In some cases, such as auto insurance, the renewal is automatic unless you inform the company that you want to cancel the coverage.

If you miss a premium payment or have your policy suspended for some other reason, including an insurance investigation, you will be sent a notice of intent to cancel the policy. If you then make the necessary payments or correct the problem which caused the policy to be suspended, the insurance company will reinstate the policy even though it may appear to be the same policy you were using before, and you may not even receive a new policy document.

Renewal of an insurance policy is commonplace and does not indicate any problems with your coverage. Reinstating a policy means that some problem has occurred with the policy and you will either have a specific amount of time to make corrections or you will lose your insurance coverage.

Another difference between renewal and reinstatement is policy renewal does usually involve any participation on the part of the policyholder, while a policy reinstatement can only occur if the policyholder takes the steps outlined in the notice of intent to cancel. This means that a policy renewal simply continues what you already have, while a reinstatement means that you took steps to fix problems, such as paying your overdue premium, removing debris from your roof, or whatever is defined in the notice you receive.

Answered June 27, 2015 by Anonymous

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