Policy period

The policy period is the stretch of time your policy is active. It’s shown on the declarations pageDeclarations pageThe declarations page is the summary at the front of an insurance policy listing who’s insured, what’s covered, the limits, deductibles, premium and policy dates.Read the definition as a start date and an end date, and most business policies run for 12 months.

How it works

Many standard business policies say coverage begins and ends at 12:01 a.m. standard time at the mailing address shown on the declarations. That way a policy running March 1 to March 1 leaves no gap at renewal.

What the policy period controls depends on the type of policy:

• An occurrence policyOccurrence policyAn occurrence policy covers injury or damage that happens during the policy period, even if the claim is filed after the policy has ended.Read the definition covers injury or damage that happens during the policy period, whenever the claim is made.
• A claims-made policyClaims-made policyA claims-made policy covers claims first made against you during the policy period, for work or incidents that happened on or after the policy’s retroactive date.Read the definition covers claims first made during the policy period, for work done after its retroactive date.
• Aggregate limitsAggregate limitAn aggregate limit is the most a policy will pay for all covered claims combined during one policy period, no matter how many claims you have.Read the definition usually reset with each new policy period.
• If your premium is based on estimated payroll or sales, a premium auditPremium auditA premium audit is the insurer’s review of your actual payroll, sales or other figures after a policy ends, used to replace estimates and set your final premium.Read the definition after the period ends compares the estimate with what actually happened.

A policy can end early if you or the insurer cancels it, under the cancellation terms in the policy and your state’s rules. Some policies are written for shorter or longer terms, for example to line up renewal dates.

An example

Why it matters for a small business

Contracts and leases often require coverage for the whole job or lease term, not just today. Check your end dates before you sign, and renew before the policy period ends so a certificate you’ve already given a client stays accurate.