What does the term grandfathered in car ins mean?

UPDATED: Sep 1, 2015

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UPDATED: Sep 1, 2015Fact Checked

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Asked September 1, 2015

1 Answer

Being grandfathered in, or the grandfather clause, should not be confused with the grandfather rule. It is all a bit confusing, but this term applied to many areas of business, not just auto insurance.

It is a provision in which an old rule still applies to some existing situations or clients. When dealing with car insurance, the company may be making big changes and wants to shield some of the longstanding clients from these rules. This often happens when insurance companies change their policies to apply to the future and all new cases. However, those who are grandfathered in" are exempt from the new and more restrictive policy mandates.

It is a kind action that is given by the insurance company, and it can be revoked at any time if the insurance company sees fit. Often times, this provision is used as a compromise for the insured when the company wants to keep them from getting upset. Insurance companies use this out of practicality or for a political situation, in which they fear that they may lose long-standing clients over newfangled rules.

The term actually came about in the late 19th century from the Southern part of the United States. Ancestors used the rights given to their grandfather's to obtain rights in society. It took place during Civil War times when slavery was still in place. The very poor would want the same rights as others, or what they grandfather had. Though this term did grand some provisions back then, it stuck and has become commonplace in many business aspects.""

Answered September 2, 2015 by kris721

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