StateCover Guide
Glossary

Policy term

By Editorial team, last reviewed

Quick answer

The policy term, also called the policy period, is the length of time your car insurance policy is in force, from the effective date to the expiration date shown on your declarations page. Car policies are often written for six months or a year.

How it works

The NAIC glossary defines the term as the period for which a policy is in effect. A few things follow from it:

  • Coverage dates. You are covered for accidents that happen between the start and end dates. A crash the day after the policy expires is not covered unless the policy was renewed.
  • Price for the term. The premium on your declarations page is the price for that term, even if you pay it in monthly installments.
  • Renewal. At the end of the term, the insurer either offers to renew, with the price for the next term, or sends a nonrenewal notice.
  • Canceling early. If you or the insurer cancels before the term ends, the Texas Department of Insurance explains that you are owed the unearned premium, the part you paid in advance that did not go toward coverage.

Example: you pay $600 for a six-month term and cancel after two months. With a pro rata refund, the unearned premium is $400.

Sources

Last reviewed by the StateCover Guide editorial team. See our editorial policy. Spotted an error? Tell us.