The power to make a car insurance coverage coverage efficient from a date up to now is a posh situation. Typically, insurers don’t enable insurance policies to turn into lively retroactively. As an illustration, if an incident occurred on October twentieth, a person can’t sometimes buy protection on October twenty second and have it apply to the earlier occasion.
This observe is averted primarily because of the potential for fraud. Retroactive software of protection would create a scenario the place people may receive insurance coverage solely after an incident, successfully shifting the monetary burden of the loss onto the insurance coverage firm with out having paid premiums for the interval throughout which the danger existed. Traditionally, insurance coverage fashions depend on predicting and distributing threat throughout a pool of policyholders earlier than losses happen; backdating basically undermines this precept.
