Here is a true story, shared to emphasis importance of paying attention to policy dates.
It was early afternoon while having an interview with a client in my office when we heard sirens wailing their mournful sound approaching our office from across the bridge leading into town. When the sounds subsided, the client commented he wondered if it was someone we knew who was being rushed to the hospital. We concluded our business and I left for home.
The first thing I had when I got home was a phone call from a client frantically needing to get in touch with me. I immediately called the number which was answered by a man who you could tell was under a great deal of stress. His wife and son had been involved in a head on collision with a beer distributor truck in the early afternoon. They were traveling east on a snow covered road and the beer distributor truck was going west. Unfortunately, snow plows had not been able to keep the road free of snow and both lanes of traffic were sharing a common lane. When his wife rounded a curve, the lane she was in crossed the yellow line into the oncoming traffic. She attempted to get over on her side but the snow groove was too deep and she could not get out of it. The trucker saw what was happening and he applied his brakes attempting to get his truck stopped but to no avail. They collided and the son was killed and the wife was in serious condition in the hospital.
“ My wife and son were involved in an accident early this afternoon and we couldn’t find our proof of insurance. Then I remembered we were going to call to add it but simply forgot. I need to add it now.”
“You do have a provision in your policy for newly acquired vehicles for a period of 30 days from date of purchase so we should be okay. I can do a proof of insurance back to the date of purchase so you would have coverage for this accident. I’ll just need you to bring your purchase contract in to the office tomorrow and we can proceed.”
When he arrived at the office early the next morning, you could see his frustration and sorrow had only gotten worse during the night. He showed me the paperwork for the purchasing of the vehicle and we discovered they had purchased the vehicle almost two months ago. All that I had told him about being able to help went for naught.
The insurance company did pay for the funeral expenses of their son and her medical up to the limits of the policy but nothing could be done to pay for their totaled vehicle or the damages done to the truck.
Key Policy Dates to Remember
Inception date–Exact date a policy goes into effect. This may also be referred to as the policy date. It begins at the exact timing requested on the application, i.e. 10:15 a.m. on the day you apply for insurance coverage.
Expiration date–Exact day when insurance coverage ends. Unless there is a contractual provision for renewal, the policy expiration date is determined to be at 12:01 a.m. on date of expiration. If there is an agreement to renew, then a grace period would be allowed. If the wording on your policy states “continuous,” then the policy will automatically renew with coverages being exactly the same as the previous policy period.
Effective date–Exact day and time when coverage takes effect. It has become very popular for insurance companies to provide package policies for their clients, so effective dates need to be paid attention to. For example, the policy period will be noted on the declaration page of your policy showing inception date of 05/01/2018 and expiration date of 05/01/2019. The coverage on home effective date may be 05/01/2018; vehicles may be effective 08/01/2018 or 12/01/2019 or some other date; and boat coverage may be 04/01/2019. This should only affect a policy in its first year because all coverages will renew at the same expiration date. If you make changes on any of these sections of coverage–i.e. selling a car or buying a new car, purchasing new residence, or adding an underage driver–then your declaration pages will show the dates of those changes.
Some policies have coverages available on a dated basis during the policy period. Newly acquired vehicles may have coverage available upon purchase of the vehicle but it may need to be reported within a certain period of time after purchase in order for coverage to remain in force. Some policies with farming exposure will have provisions for covering newly acquired equipment with that equipment being duly noted at audit time with premium being collected back to date of purchase and charge for in the new policy period. New land or residence may also have coverage automatically applied during policy period which should be accounted for at renewal.