Copy - Intro to Insurance for County CSRs (August 2024 v 2).pptx

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Policy Term, Policy Period, or Module

Expiration Date

Effective Date

Effective & Expiration Dates, Policy Term, Policy Period, or Module

Deductible

Indemnification

Deductible & Indemnification

Expiration

Termination of a contract of insurance between the insurer and insured when the policy does not renew.

Cancellation

Termination of the insurance contract prior to the established expiration date of the policy.

Reinstatement

Making a cancelled or expired policy active again.

Expiration, Cancellation, & Reinstatement

Continuous Coverage

Lapse

Continuous Coverage & Lapse

Earned Premium

Unearned Premium

Earned Premium & Unearned Premium

For certain lines of business, the premium is calculated based on an estimate of factors such as payroll, number of employees, etc. At the end of the policy term, the policy may be audited to determine whether the premium should be adjusted based on the actual number of employees and payroll amount.

Audit/Auditable Policies

In this example, the insured paid through November 12, but only cancelled the policy on November 30. Therefore, they owe NCFB earned premium for the 18 additional days that the policy was in force.

Earned Premium

The premium amount owed to the insurance company for each day that coverage is in force.

For example, if an insured gets into a car accident, the insured may have to pay the ‘first’ $500, and the insurance company covers the remaining loss cost.*** NOTE: The higher the deductible, the lower the premium.

Deductible

In the event of a covered loss, the predetermined amount that the insured must pay out-of-pocket before compensation is paid by the insurance company.

For example, if an insured loses their two-bedroom, two-bathroom home, the insurance company will rebuild the house as it was before the loss. They won't be upgraded to the Biltmore Mansion.

Indemnification

Restoration of the insured to the same financial position that would have existed if no loss had occurred; no better, no worse.

The fraction of premium that is unused for the time period in which premium was paid.

Unearned Premium

For example, if the insured paid in full for a one year policy, they would have 365 days of coverage. If they decide to cancel the policy after only 274 days, NCFB would owe the insured unearned premium for the 91 additional days that the insured has already paid for coverage, but will not use due to the cancellation.