What is a Waiting Period?
A waiting period refers to the set duration of time between when an insurance policy is purchased and when the coverage officially takes effect. During this period, no claims can be made, meaning the insured is not protected by the policy for any incidents that occur. Waiting periods vary depending on the type of insurance and the provider’s terms.
In property and car insurance, waiting periods can apply for various reasons, such as a new policyholder initiating coverage or changes being made to existing policies. For instance, if a homeowner purchases insurance coverage, they might need to wait a specified number of days before any claims related to property damage are eligible for coverage.
This concept helps insurers manage risk by preventing individuals from purchasing insurance in anticipation of an imminent claim. It ensures that insurance policies are used to cover unexpected events rather than known or pending issues.
In some cases, policyholders can negotiate shorter waiting periods, but this typically involves additional costs or higher premiums.