Question

If an insurer has the right to refuse to renew a policy, the policy has which of the following provisions?

a) Renewable
b) Non-cancelable
c) Guaranteed renewable
d) Optionally renewable

Answer 1

The correct answer is d) Optionally renewable, meaning the insurer can choose whether or not to renew the policy at the end of its term.

Step-by-step explanation:

If an insurer has the right to refuse to renew a policy, the policy has the Optionally renewable provision. An optionally renewable policy grants the insurer the option to review and decide whether or not to renew the policy for another term. This is in contrast to policies that may be labeled as renewable, where the policyholder has the option to continue the policy, or non-cancelable, where the insurer cannot cancel the policy nor refuse to renew it as long as the premiums are paid. The guaranteed renewable policy means the insurer must renew it but can change the premium for the entire class of insureds. Therefore, the correct answer is d) Optionally renewable.