Policy Types and Events Flashcards
What type of policies does State Farm have?
Auto, Health, Fire, and Life
What is the Fire Policy format?
State Code- Base Policy Number- Check Code
What is the Auto Policy format?
Base Policy Number- Renewal Date- State Code- Change Code
What is the Life Policy format?
Company Code- Base Policy Number
What is the Health Policy format?
Health Policy Indicator (H)- Base Policy Number- State Code
Example of Fire Policies
Personal: Homeowners/ Renters/ Rental dwellings/ Personal liability umbrella/ Personal articles/ Boatowners
Commercial: Business owners/ Inland marine/ farm ranch/ workers comp/ contractors/ business miscellaneous
Example of Health Policies
Medicare supplement/ hospital income/ disability income/ mortgage disability income/ long term care
Example of Auto Policies
Personal: Private Passenger/ Motorcycles/ Recreations and off road
Commercial: Box truck/ Delivery vans/ Dump truck/ Buses/ Tow trucks/ Tractors/ Flatbed trailers
Example of Life Policies
Death Benefit
What are the 6 Policy events?
1 Issuance
2 Renewal
3 Cancellation
4 Reinstatement
5 Rewrite
6 Change
What is Policy Insurance?
Policy insurance is the process of creating an insurance policy and providing it to the policyholder.
What is Policy Renewal?
Policy renewal occurs when a policy is about to expire; it is continued or extended for an additional policy term.
What is Policy Cancellation?
Policy cancellation is when a policy is terminated by either the policyholder or the company.
What are the 3 reasons for cancelling a policy?
1 policyholder requested it.
2 company.
3 non-pay.
What is Policy Reinstatement?
occurs when a previously canceled policy is put back in force and the policy coverage resumes
What is Policy Rewrite?
is when an existing policy is replaced by a new policy
What is Policy Change?
is when a part of the policy is being altered during the policy term. It is often referred to as a midterm change
Policy Insurance Event Impact for coverage, policy number, premium and term dates
Coverage: begins on the date requested in the application
Policy number: is assigned using a specific format.
Premium: when submitted the premium is an estimate/ when issued may be the same or more or less
Term Dates: the effective and expiration dates are estimated based on the policy effective date and the type of policy.
Policy Renewal Event Impact for coverage, policy number, premium and term dates
Coverage: continues and is extended for another policy term
Policy number: most maintain the same number when they renew; however, some policies such as auditable fire receive a policy number at renewal.
Premium: can increase, decrease or remain the same at renewal
Term dates: the effective and expiration dates are updated to reflect the new policy term and the continuation of coverage.
Policy Cancellation Event Impact for coverage, policy number, premium and term dates
Coverage: terms on the cancellation date
Policy number is not affected.
Premium: the policyholder owes for the premium up to the cancellation date and no longer owes a premium beyond the cancellation date
Term date: the term dates remain the same, but the cancellation date is indicated on the policy in the division.
Policy Event reinstatement impact for coverage, policy number, premium and term dates
Coverage: is reinstated from the payment date through the end of the policy term. the payment date depends on how the payment is made.
Policy number is not affected.
Premium: the PH does not owe the premium from the cancellation date to the reinstatement date (TOOF) When the policy reinstates the premium is adjusted to remove the amount during the time the policy was lapsed
Term dates: the policy term date stays the same, but the reinstatement date is indicated on the policy in the division.
Policy Event Rewrite for Auto impact for coverage, policy number, premium and term dates
coverage: is seamless because when one auto policy ends, the other begins.
Policy number: The new auto policy receives a new number.
Premium: The premium can increase, decrease or remain the same. This depends on several factors, such as insurance rates in the new state, insurance rates in the new SF company or change in coverage to meet requirements.
Policy Event Rewrite for Fire impact for coverage, policy number, premium and term dates
Coverage: Usually seamless because when one fire policy ends the other begins.
Policy number: The replacement fire policy receives a new policy number.
Primum: The premium can increase or decrease or remain the same. This depends on several factors, such as insurance rates of the new location, the type of fire policy or prior term audit results.
Term dates: The policy term dates depend on the effective date of the replacement fire policy.
Policy Event Rewrite for Health impact for coverage, policy number, premium and term dates
Coverage: Coverage does not change.
Policy number: The policy number remains the same except the state code (the last two digits) is updated to reflect the new state.
Premium: The premium does not change.
Term date: The policy does not change.
Why would SF cancel a policy?
SF can cancel or not issues a policy if underwriting determines the risk to the company is too high to provide coverage under the policy..
Why would the policyholder not pay the premium due?
experiencing financial hardship
did not receive the bill
expecting changes to the policy that will reduce or eliminate the premium due
Why would a policy need to be replaced by a new policy?
Auto: when the policy moves from one state to another (state to state transfer) or moves between SF companies (company to company transfers)
Fire: policy is rewritten when the location changes, the type of fire policy changes or when an auditable fire policy is renewing
Health: policies are rarely rewritten. when a health policy transfers from one state to another state the health division is notified of the address change and the state code in the health policy number is updated to reflect the new state where the PH resides.
Explain the impact of the policy change event.
The majority of the policy changes affect the premium. Because they often change midterm, the change in the premium is a prorated amount based on the effective date of the change through the end of the policy term.
Changes regularly cause adjustments, which are amounts billed in addition to the policy’s regular instalments.
The process of a policy change
Most policy changes require an event to submit a policy transaction (PT) through NECHO. The policy change is sent to the division to review and process. If the policy is on SFPP, the division will send the information to the SFPP account.
Explain the impact of an auto policy change event.
Added Driver (adding, changing, or removing drivers)
Coverage Changes (adding, changing, or removing coverage)
Discount Changes (adding, changing, or removing discounts, such as: multi-car, good student, and muti-line)
Change of Vehicle (Replacing and existing vehicle with a new vehicle.
Vehicle Usage changes (pleasure, school, work, farming& business)
Total Suspensions (temporarily removing all coverage)
Partial Suspension (Temporarily removing some, but not all, coverages.
Explain the impact of a fire policy change event.
-Special Event Endorsements:
Added to certain fire policies when an insured is hosting a family-oriented event at a location they do not own.
i.e. weddings, birthday parties, family reunions and baby showers
Provides protection in the event a guest falls or facility equipment is damaged.
-Earthquake Endorsements:
Added to fire policies coverage for the damage caused by an earthquake.
Different from an earthquake policy.
Eligible to bill on SFPP.
Explain the impact of a health policy change event.
-Modified
When underwriting is unable to issue a health policy at the quoted premium. a modified offer will be sent to the PH. Until the PH accepts the modified offer, the policy bills based the original quoted premium.
-Premium Waived
indicates the premium has been waived while the insured collects claim benefits.
