Texas Adjuster Practice Test

What is the term used to refer to the period from the effective date to the expiration date of an insurance policy?

1. Deductible

2. Policy Period

3. Coverage Limit

4. Claim Period

The correct answer is: Policy Period

The term used to refer to the period from the effective date to the expiration date of an insurance policy is the "Policy Period." This period defines the duration during which the insurance coverage is active and applicable, meaning that any claims made for losses occurring within this timeframe are eligible for coverage under the terms of the policy. The significance of the policy period lies in its role in determining when a claim can be made; it establishes the boundaries of the insurance protection provided by the policy. If a loss occurs outside this period, the insurer is not liable for the claim. In understanding why other terms do not apply: a deductible refers to the amount that the insured must pay out-of-pocket before the insurance company covers the remaining costs. Coverage limit specifies the maximum amount that an insurer will pay under a policy for covered losses, not the duration of coverage. The claim period implies a timeframe in which a claim must be reported but does not represent the duration of the policy itself. Thus, "Policy Period" accurately captures the complete timeline of the insurance contract's effectiveness.