PSI Property and Casualty Practice Exam 2025 – Complete Prep Guide

Question: 1 / 400

What does the term "automatic renewal" mean in an insurance policy?

The policy is renewed automatically at the end of each term unless cancelled by the policyholder

The term "automatic renewal" in an insurance policy refers to the scenario where the policy is renewed automatically at the end of each term unless the policyholder takes action to cancel it. This means that unless the insured opts out or cancels the policy, it will continue to be in force without the need for the policyholder to manually renew or initiate a new application.

This feature is designed for convenience, ensuring continuous coverage without interruption. It helps mitigate the risk of a lapse in protection due to forgetfulness or oversight on the part of the policyholder. Automatic renewal typically entails the same terms and conditions as the previous term, unless otherwise specified.

Understanding this concept is crucial for policyholders, as it emphasizes the importance of being aware of the policy's renewal terms and the necessity of reviewing coverage options periodically to ensure they still align with their needs.

Get further explanation with Examzify DeepDiveBeta

The policy remains in effect until the policyholder chooses to update it

The insurer has discretion to renew the policy without notice

The policy terminates at the end of the coverage term

Next Question

Report this question

Download PSI Property and Casualty Practice Exam PDF Study Guide
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy