Policy Types and Events

Question 1

What type of policies does State Farm have?

Answer 1

Auto, Health, Fire, and Life

Question 2

What is the Fire Policy format?

Answer 2

State Code- Base Policy Number- Check Code

Question 3

What is the Auto Policy format?

Answer 3

Base Policy Number- Renewal Date- State Code- Change Code

Question 4

What is the Life Policy format?

Answer 4

Company Code- Base Policy Number

Question 5

What is the Health Policy format?

Answer 5

Health Policy Indicator (H)- Base Policy Number- State Code

Question 6

Example of Fire Policies

Answer 6

Personal: Homeowners/ Renters/ Rental dwellings/ Personal liability umbrella/ Personal articles/ Boatowners

Commercial: Business owners/ Inland marine/ farm ranch/ workers comp/ contractors/ business miscellaneous

Question 7

Example of Health Policies

Answer 7

Medicare supplement/ hospital income/ disability income/ mortgage disability income/ long term care

Question 8

Example of Auto Policies

Answer 8

Personal: Private Passenger/ Motorcycles/ Recreations and off road

Commercial: Box truck/ Delivery vans/ Dump truck/ Buses/ Tow trucks/ Tractors/ Flatbed trailers

Question 9

Example of Life Policies

Answer 9

Death Benefit

Question 10

What are the 6 Policy events?

Answer 10

1 Issuance
2 Renewal
3 Cancellation
4 Reinstatement
5 Rewrite
6 Change

Question 11

What is Policy Insurance?

Answer 11

Policy insurance is the process of creating an insurance policy and providing it to the policyholder.

Question 12

What is Policy Renewal?

Answer 12

Policy renewal occurs when a policy is about to expire; it is continued or extended for an additional policy term.

Question 13

What is Policy Cancellation?

Answer 13

Policy cancellation is when a policy is terminated by either the policyholder or the company.

Question 14

What are the 3 reasons for cancelling a policy?

Answer 14

1 policyholder requested it.
2 company.
3 non-pay.

Question 15

What is Policy Reinstatement?

Answer 15

occurs when a previously canceled policy is put back in force and the policy coverage resumes

Question 16

What is Policy Rewrite?

Answer 16

is when an existing policy is replaced by a new policy

Question 17

What is Policy Change?

Answer 17

is when a part of the policy is being altered during the policy term. It is often referred to as a midterm change

Question 18

Policy Insurance Event Impact for coverage, policy number, premium and term dates

Answer 18

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.

Question 19

Policy Renewal Event Impact for coverage, policy number, premium and term dates

Answer 19

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.

Question 20

Policy Cancellation Event Impact for coverage, policy number, premium and term dates

Answer 20

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.

Question 21

Policy Event reinstatement impact for coverage, policy number, premium and term dates

Answer 21

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.

Question 22

Policy Event Rewrite for Auto impact for coverage, policy number, premium and term dates

Answer 22

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.

Question 23

Policy Event Rewrite for Fire impact for coverage, policy number, premium and term dates

Answer 23

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.

Question 24

Policy Event Rewrite for Health impact for coverage, policy number, premium and term dates

Answer 24

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.

Question 25

Why would SF cancel a policy?

Answer 25

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..

Question 26

Why would the policyholder not pay the premium due?

Answer 26

experiencing financial hardship
did not receive the bill
expecting changes to the policy that will reduce or eliminate the premium due

Question 27

Why would a policy need to be replaced by a new policy?

Answer 27

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.

Question 28

Explain the impact of the policy change event.

Answer 28

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.

Question 29

The process of a policy change

Answer 29

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.

Question 30

Explain the impact of an auto policy change event.

Answer 30

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.

Question 31

Explain the impact of a fire policy change event.

Answer 31

-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.

Question 32

Explain the impact of a health policy change event.

Answer 32

-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.