Introduction

As we approach the year 2024, many individuals and businesses are looking into their insurance policies and considering the difference between policy year and calendar year. While both terms may seem similar, they actually refer to different timeframes and can have a significant impact on your insurance coverage. In this article, we will explore the differences between policy year and calendar year and help you determine which option is best for you.

What is Policy Year?

Policy year refers to the 12-month period during which your insurance policy is in effect. This timeframe may or may not align with the calendar year and is set by the insurance company. For example, your policy year may begin on July 1st and end on June 30th of the following year.

During the policy year, you are entitled to the coverage outlined in your insurance policy. This coverage may include medical expenses, property damage, liability protection, and more. It is important to note that your coverage may change from year to year, so it is important to review your policy regularly to ensure that it still meets your needs.

Question:

Can I change my policy year?

Answer:

In most cases, you cannot change your policy year. This timeframe is set by the insurance company and cannot be altered. However, if you are unhappy with your policy year, you may be able to switch to a different insurance company that offers a policy year that better aligns with your needs.

What is Calendar Year?

Calendar year refers to the period of time from January 1st to December 31st. This timeframe is used by many individuals and businesses to track their finances and plan for the future. When it comes to insurance, calendar year is often used to determine deductibles, out-of-pocket maximums, and other important factors.

For example, if your insurance policy has a $1,000 deductible per calendar year, this means that you will be responsible for paying the first $1,000 of covered expenses each year. Once you have met your deductible, your insurance coverage will kick in and cover the remaining costs (up to your policy limits).

Question:

What happens if I exceed my out-of-pocket maximum in a calendar year?

Answer:

If you exceed your out-of-pocket maximum in a calendar year, your insurance company will typically cover 100% of your covered expenses for the remainder of the year. This means that you will not be responsible for any additional out-of-pocket costs for the rest of the calendar year.

Which Option is Best?

Ultimately, the choice between policy year and calendar year depends on your individual needs and preferences. If you prefer to have a consistent timeframe for your insurance coverage, policy year may be the best option for you. However, if you prefer to align your insurance coverage with the calendar year (and take advantage of deductibles and out-of-pocket maximums), calendar year may be the better choice.

It is important to review your insurance policy regularly to ensure that it still meets your needs and provides adequate coverage. If you are unsure which option is best for you, speak with your insurance agent or broker for guidance and advice.

Conclusion

Understanding the difference between policy year and calendar year is important when it comes to your insurance coverage. By knowing the benefits and drawbacks of each option, you can make an informed decision that meets your individual needs and preferences. Whether you choose policy year or calendar year, be sure to review your insurance policy regularly and make any necessary adjustments to ensure that you are adequately protected.