The Underwriting Window Nobody Mentions

A new policy is not fully settled on day one. California Insurance Code section 662 gives an insurer a limited window at the start of a brand-new auto policy — the first 60 days — in which it has more latitude to cancel than it will ever have again. Almost nobody is told this at purchase, and it explains a category of unpleasant surprises.

What the window is for

It is the carrier's chance to finish looking. Some checks are instant and some are not: a document takes a week to arrive, a record request comes back slowly, an inspection is scheduled. The window exists so that the carrier can cover you immediately and complete the diligence afterwards, rather than making everyone wait.

On the whole this is good for you. Same-day coverage exists because carriers can bind first and verify second.

What it means in practice

• Answer requests quickly. If the carrier asks for a photo of the car, a copy of a license, or proof of prior insurance, that request has a deadline behind it. Unanswered requests are a common reason a new policy does not survive its first two months.
• Expect a possible re-rate. If verification contradicts the application, the price is corrected. Better to hear it in week two than at a claim.
• Keep your documents. Save the declarations page and the ID cards the day they arrive, not the week you need them.

After the window closes

Once a policy is past its early period, California's rules on cancellation get considerably tighter — the grounds narrow and notice requirements apply. The practical effect is that a policy which cleared its first two months without incident is a stable thing.

Non-renewal is a different animal

Cancellation ends a policy mid-term. Non-renewal simply declines to start the next term, and it comes with its own advance-notice rules. They get confused constantly, including by people who work in insurance, and the difference matters because the timelines and your options are not the same. If you receive a notice, read the top of it to see which one you are holding.

What to actually do

Put the carrier's number in your phone the day the policy starts. Open the mail from them. If something asks for a response, respond that week. It is unglamorous advice and it is the whole of it.

If a policy of yours didn't survive its first 60 days, tell us what the notice said — the reason usually determines what happens next.