Legal Definitions - continuous policy

A continuous policy refers to an insurance agreement that, once established, remains in effect indefinitely or for an extended period, typically renewing automatically without requiring the policyholder to take specific action to renew it at fixed intervals. Its continuation usually depends on the timely payment of premiums and adherence to the policy's terms and conditions. It differs from policies that have a definite end date and require explicit renewal or reapplication.

Here are some examples illustrating a continuous policy:

• Example 1: Auto Insurance with Automatic Renewal

  Sarah has an auto insurance policy that automatically renews every six months. She receives a statement indicating the new premium, and as long as she pays it, the coverage continues without interruption. She doesn't need to fill out new forms or explicitly request a renewal.

  This illustrates a continuous policy because Sarah's insurance coverage is designed to roll over and remain in force as long as she fulfills her payment obligations. She doesn't need to actively reapply or sign new paperwork at each renewal period; the policy's structure ensures ongoing protection.

• Example 2: Professional Liability Insurance

  Dr. Chen, a dentist, maintains a professional liability insurance policy that renews annually. The insurer sends him a renewal notice with the updated premium, and upon payment, the policy automatically extends for another year. There is no break in coverage unless he decides to cancel or stops paying the premiums.

  This is a continuous policy because the coverage seamlessly transitions from one year to the next without Dr. Chen having to initiate a new application process. The policy's design provides ongoing protection for his professional practice, contingent on the timely payment of premiums.

• Example 3: Business General Liability Policy

  A local restaurant holds a general liability insurance policy that is set up for automatic annual renewal. Each year, the insurer reviews the policy, adjusts the premium based on factors like claims history and business operations, and sends a new invoice. As long as the restaurant pays the updated premium, the policy remains continuously active, providing uninterrupted coverage for potential liabilities.

  This demonstrates a continuous policy because the insurance coverage for the restaurant's general liabilities persists year after year without requiring the business to go through a full reapplication process. The policy is structured to provide ongoing protection, contingent on the payment of regular premiums.