What Is a Change of Premium Provision?

A change of premium provision in your insurance can cost you some serious change.

Insurance is vitally important to cover loss or damage from unexpected events. However, insurance costs can change and become a burden to those with policies, especially if the policies contain a change of premium provision.

Insurance Overview

An insurance policy is a contract between an insurer and a policyholder that states the insurer will pay for, or restore, any loss or damage suffered by the policyholder in exchange for a regular premium paid to the insurer. The policy contains many clauses or provisions, including statements of what type of losses are covered, how policyholders are paid, how long coverage lasts and under what conditions premiums increase or decrease. The latter is called a change of premium provision.

Change of Premium Provision

Change of premium provisions vary dependent on the type of insurance and level of coverage. Typically, the provision states the maximum change in premium allowable under the contract, the maximum number of times in a year the premium can change and the method of notice to the policyholder of when changes take effect. Change of premium is at the discretion of the insurer and is legally binding.

Other Provisions

Insurance companies may have other provisions with regard to the premium. For instance, there are also waiver of premium provisions in some contracts. These provisions stipulate when the policyholder may be exempt from payment of a provision.

References

• Free Advice.com: Health Insurance Provisions