Personal Lines Broker-Agent Practice Test 2025 – Comprehensive All-in-One Guide for Exam Success!

Question: 1 / 400

What is reinstatement in the context of insurance policies?

Changing the premium rate after a claim

Restoring a lapsed policy to full effect

Reinstatement in the context of insurance policies refers to the process of restoring a lapsed policy to its full effect. This can occur when a policyholder has allowed their insurance coverage to expire due to non-payment or failure to meet certain conditions. If the policyholder takes corrective actions, such as paying any overdue premiums or fulfilling specific requirements set by the insurer, the insurance company may agree to reinstate the policy. This restores the insurance coverage as if it had never lapsed, ensuring that the policyholder maintains their original benefits and protection under the policy.

This concept is critical for policyholders as it provides an opportunity to regain coverage without needing to take out a completely new policy. While changes to premium rates, upgrading coverage limits, and cancellation due to non-payment are all relevant to insurance policies, they do not align with the definition of reinstatement.

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Upgrading coverage limits on a policy

Canceling a policy due to non-payment

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