West Virginia Adjusters Practice Exam

What happens if Owen pays his insurance premium after being notified of cancellation but before the policy ends?

1. The policy will continue without interruption.

2. The policy will be canceled regardless.

3. The policy can be reinstated but with higher premiums.

4. The policy will require a new application process.

The correct answer is: The policy will continue without interruption.

The correct answer is that the policy will continue without interruption if the premium is paid after notification of cancellation but before the policy officially ends. In many insurance agreements, if a policyholder pays their premium before the cancellation takes effect, the insurer is generally obligated to maintain coverage. This concept is based on the principle that the payment of the premium ensures the continuation of the insurance contract, assuming the payment is made according to the terms specified in the policy. The notion that the policy will be canceled regardless does not hold true in situations where the premium has been paid; doing so typically negates the cancellation process. Reinstatement with higher premiums might apply in cases where there is a lapse in payment beyond the point of cancellation, but in this scenario, payment before the termination date prevents that situation. Lastly, requiring a new application process might be necessary if there is a significant break in coverage; however, timely premium payment maintains the current policy status. Thus, as long as Owen pays his insurance premium on time—after receiving the cancellation notice but before the policy termination date—his policy will continue uninterrupted.