The power to make a automobile insurance coverage coverage efficient from a date previously is a fancy situation. Usually, insurers don’t permit insurance policies to grow to be lively retroactively. As an illustration, if an incident occurred on October twentieth, a person can’t usually buy protection on October twenty second and have it apply to the earlier occasion.
This observe is averted primarily as a result of potential for fraud. Retroactive utility of protection would create a scenario the place people may get hold of 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 chance existed. Traditionally, insurance coverage fashions depend on predicting and distributing danger throughout a pool of policyholders earlier than losses happen; backdating essentially undermines this precept.
