Glossary
Lapse
A gap in coverage caused by a policy terminating — usually for non-payment — before a replacement or reinstatement takes effect.
A lapse is the period during which the insured believed they had coverage, or at least had it recently, but did not. Even a one-day lapse can affect future insurability and pricing, and in commercial lines it can breach contractual insurance requirements.
Lapses matter to agencies operationally and financially: they trigger chargebacks, they are a leading cause of client attrition, and they are an errors-and-omissions exposure when the agency failed to warn the client.
See also
- Cancellation — The termination of a policy before its expiration date, initiated by the insured or by the carrier for reasons such as n…
- Reinstatement — Restoring a cancelled policy to active status, typically after the insured pays overdue premium within an allowed window…
- Errors and Omissions Insurance — Professional liability coverage protecting an insurance agency against claims arising from mistakes in the advice or ser…