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Simple English definitions for legal terms
perpetual policy
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A quick definition of perpetual policy:
A perpetual policy is a type of insurance policy that stays in effect until one of the parties decides to end it. It is also called a continuous policy. Insurance policies are contracts that protect people from financial loss due to accidents or other events. There are many different types of insurance policies, such as life insurance, homeowner's insurance, and commercial general-liability insurance. Insurance companies use a process called insurance rating to determine how much to charge for a policy. Insurance pools are groups of insurers that share premiums and losses to spread the risk. The Insurance Services Office is a nonprofit organization that provides services and tools to the insurance industry.A more thorough explanation:
A perpetual policy is an insurance policy that remains effective without renewal until one of the parties terminates it according to its terms. This means that the policy will continue indefinitely until either the insurer or the insured decides to end it.
For example, a life insurance policy may be a perpetual policy that remains in effect until the insured person dies or until the policy is cancelled by the insurer or the insured. Another example is a property insurance policy that remains in effect until the property is sold or until the policy is cancelled.
Perpetual policies are useful for people who want long-term coverage without having to worry about renewing their policy every year. However, they may also be more expensive than policies that require renewal because the insurer is taking on more risk by providing coverage for an indefinite period.