On the Declarations Page, usually on page one has the effective date of when the policy starts and the expiration date of when the policy ends. Although it does vary by state and by line of business, normally most all policies in the United States start at 12:01 AM and end at 12:01 AM as far as the time goes. Making sure that all of your policies start in time without gaps in coverage dates is extremely important especially if you have a claim. Some insurance policies, such as personal automobile policies, can be on a six-month inception and expiration cycle. There are some commercial insurance policies that can be on one, two, or three-year cycles. In these tough economic times rarely do you find a three-year policy being offered as insurance companies want the option to change the pricing at each renewal date. Sometimes you'll see in substandard auto policies that the policy will start at the date and time the application is signed. This helps to prevent fraudulent claims from happening. If somebody gets in an auto accident at 2 AM in the morning and they have no insurance and they go to an insurance agent's office at 8 AM and purchase auto insurance, the carrier that uses the standard 12:01 AM start time would be picking up claim that they did not intend to pick up. So even though the insurance carrier will ask whether you have had any claims or losses they do not want to take a chance on starting the policy at 12:01 AM, just in case there could be a potential for a claim. If you have multiple policies that are covering multiple lines of business, it is important that all of your policies have concurrent effective and expiration dates. Besides just making it easier for you to deal with your insurance portfolio once a year, it also helps prevent coverage gaps, especially on the liability policies. One of the most glaring examples is if you have a general liability policy and an automobile liability policy with an umbrella policy covering both of those policies all with different policy effective dates. This can create gaps in limits and coverages because the policy dates do not run concurrently. If you have had a mix of occurrence policies and claims made policies over the years the policy dates and extensions or tail coverage can be extremely important in making sure there are no coverage gaps down the line. Most insurance contracts have policy effective dates that coincide with when they first started their businesses or rented their location for their businesses. As the insured, you have the option to change the effective date to whatever date you prefer. If for accounting reasons or for just pure ease of doing business, you can pick any effective date that you want. Obviously there is a little bit of paperwork involved in canceling and rewriting your policies to the effective date that you choose but once it is done you should be set for quite some time with an effective date that works into your schedule. R. Glenn Matsen, CEO, MBA, CPCU, ARM, CLU, ChFC has over 33 years of risk management experience in providing insurance solutions for the small business owners needs. His website contains detailed information on Commercial Insurance [http://commercialinsurancequotes.org] and Small Business Insurance Quotes [http://commercialinsurancequotes.org].
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