Short and Long Term Policies

Rules regarding Short and Long Term Policies

Section 9 of HB1320, effective July 1, 2013, and amended Indiana Code § 22-3-5-5(c)(6). It provides that policies may be written for periods other than one or three-year periods by adding the subsection wording “(C) the policy covers a period permitted in bureau rules under IC 27-7-2-20.”  

22-3-5-5. Insurance policy forms – Scope of coverage – Provisions – Approval
(6) This policy shall automatically expire one (1) year from the effective date of the policy unless:
(A) The policy covers a period of three (3) years, in which event, it shall automatically expire three (3) years from the effective date of the policy; or
(B) The policy is issued as a continuous policy, in which event it shall not expire until the earlier of one (1) year or the date terminated by the insured or the insurer in accord with applicable state law and applicable policy provisions.

The termination either of a one (1) year or a three (3) year policy, as provided in this subdivision, shall be effective as to the employees of the insured covered by the policy.(C) the policy covers a period permitted in bureau rules under IC 27-7-2-20.​ 

Assigned Risk Policies

Assigned risk rules permit short term policies, but not long term polices. So, for an insured who desires 15 months of coverage, the servicing carrier can write a one year policy and a three month policy. The rule doesn’t specify which term should come first.

The NCCI Assigned Risk Supplement (1.D – General Info) specifies the following: 

A policy term in the assigned risk market is one year. A one-year policy is a policy issued for a one-year period and does not exceed one year and 16 days. In accordance with NCCI’s Basic Manual Rule 4-A-3-n, a short-term policy may only be obtained once within a twelve (12)-month period unless agreed to by the assigned carrier.