Reinstatement

Overview

Reinstatement is a policy transaction that restores coverage to the policy after a cancellation. There are two basic types of reinstatement:

  • A standard reinstatement is effective as of the cancellation time, so that coverage on the policy is continuous once the reinstatement is issued.

  • A reinstatement with a gap is effective after the cancellation time, so that there is a period of time where there is no coverage, even after the reinstatement is issued.

Behavior

The cancellation period is the time from the onset of the cancellation (based its effective time) and the remainder of the policy (the endTime of the latest term). It is possible for there to be more than one cancellation involved: For example, a policy could be cancelled effective February 1, and then cancelled again effective January 1. This has the effect of pulling the cancellation earlier. In this case, the cancellation period would be January 1 onward after the second cancellation was applied.

A reinstatement transaction can be effective any time in the cancellation period, but not before. For example, a policy that starts January 1, and then is cancelled effective March 1, cannot be reinstated effective February 1 because that would be before the cancellation period starts.

If the effective time of the reinstatement is not specified, then the default will be the beginning of the cancellation period.

Reinstatement After Multiple Cancellations

If a policy is cancelled as of a certain time, then a second cancellation may only be effective-dated before that time, since it would have no effect if it were effective-dated during an already-cancelled period.

When there are multiple cancellations, any reinstatement applied will restore all coverage after the effective time of the reinstatement. For example, if there is a cancellation effective February 1 and another effective March 1:

  • A reinstatement effective February 1 would restore all coverage.

  • A reinstatement effective February 15 would restore all coverage after February 15, leaving a gap in coverage between February 1 and February 15. (Note that the March 1 cancellation is not reapplied, so coverage continues through the end of the policy.)

  • A reinstatement effective March 1 would undo the effect of the March 1 cancellation but leave the month of February with a gap.

Reinstatement with a Gap

The reinstatement can be made effective after the cancellation effective time, which will result in reinstatement with a gap. This will create two new segments for the policy term:

  • A gap segment, which indicates that there is no coverage between the cancellation effective time and the reinstatement effective time; and

  • A normal segment, which indicates the resumption of coverage.

Reinstatement with gap is otherwise the same as a typical reinstatement.