What Is a Rewrite in Insurance? Key Things to Know
Demystify insurance rewrites. Learn what it means when your policy is replaced and how to navigate this important change.
An insurance rewrite occurs when an existing policy is canceled and replaced with a brand-new policy. This process involves the termination of the old contract and the issuance of a new one. The new policy will have a new policy number and potentially different terms and premium rates, even if it covers similar risks. Rewrites are undertaken to ensure coverage accurately reflects current circumstances or to address administrative needs.
Defining an Insurance Rewrite
An insurance rewrite involves the termination of an existing insurance policy and the simultaneous issuance of a completely new one. The original policy is canceled, and a new policy takes effect with a unique policy number. Its terms, conditions, and premium rates may differ from the previous one, even if the coverage appears similar. This process is a complete replacement of the insurance contract, rather than a mere alteration. While a rewrite usually aims for seamless coverage, a brief gap can occur if not handled carefully. Insurers often use rewrites for administrative efficiency or to reflect significant changes in the insured risk or policyholder information. It is a formal transaction that creates a new policy, typically because a modification is too significant for a standard policy change.
Common Scenarios for Insurance Rewrites
Significant changes to the insured risk frequently necessitate an insurance rewrite. For example, a major home renovation that substantially increases a property’s value or alters its risk profile may require a new policy to accurately reflect the updated dwelling and liability exposures. Adding a new driver with a different risk history to an auto policy, especially one with a higher risk profile, could trigger a rewrite to adjust coverage and premiums accordingly. These situations often mean the original policy structure no longer precisely matches the current risk.
Changes in policyholder information can also lead to a rewrite. If a business changes its legal structure, such as converting from a sole proprietorship to a limited liability company (LLC), the existing insurance policy may need to be rewritten to reflect the new legal entity. A change in ownership of an insured asset, like a property or vehicle, could also prompt a rewrite to ensure the policy is correctly issued to the new owner. Insurers sometimes use rewrites to transfer a policy from one account to another, known as an account rewrite.
Insurers themselves may initiate rewrites due to internal system upgrades, product restructuring, or portfolio transfers. When an insurance company updates its underwriting models or introduces new product lines, existing policies might be rewritten to align with the new offerings or to migrate them to a more current administrative platform. Occasionally, a significant error in the initial policy issuance that cannot be corrected through a simple endorsement may also lead to a rewrite. A policyholder might also request a complete reset of their coverage if their needs have changed significantly.
Distinguishing Rewrites from Other Policy Changes
An insurance rewrite differs from a policy renewal. A renewal extends an existing policy for another term, often with the same policy number and general terms, though premiums and some conditions may be updated. A rewrite terminates the old policy and issues an entirely new one, resulting in a new policy number and potentially a complete overhaul of terms. A renewal continues the existing contract, while a rewrite creates a new one from scratch.
Rewrites are also distinct from endorsements, sometimes called riders or amendments. An endorsement is a modification or addition to an existing insurance policy that alters particular terms, adds or removes coverage, or adjusts limits. Policy changes documented through an endorsement do not create a new policy; they simply amend the current one. For instance, changing an address within the same state or adding an authorized person might be handled via an endorsement. A rewrite, however, involves canceling the old policy and issuing a new one, which is a more comprehensive action than an endorsement.
The Rewrite Process and Policyholder Considerations
An insurance rewrite can be initiated by the insurer, often due to significant changes in the insured risk or internal administrative needs, or by the policyholder. Once initiated, the insurer will typically require updated information from the policyholder, similar to a new application process. This ensures that the new policy accurately reflects all current details and risk factors.
Policyholders should carefully review all new policy documents, as the terms, conditions, coverages, deductibles, and premiums may have changed. It is important to confirm the effective date of the new policy and the cancellation date of the old one to avoid any gaps in coverage. The new policy should ideally begin exactly when the old one ends. Policyholders will also receive a new policy number, which should be updated in their records and provided to any relevant third parties, such as mortgage lenders.
Premium adjustments are common during a rewrite, and policyholders may receive a refund for the unused portion of the old policy’s premium or be required to pay an additional premium for the new coverage. Maintaining open communication with their insurance agent or the insurer is advisable to clarify any uncertainties. Policyholders should inquire about any potential fees associated with canceling the existing policy mid-term and understand how the rewrite might affect accrued policy benefits, such as claims-free discounts or loyalty rewards.