When a party with the power to terminate an insurance policy exercises that power, a _____ has occurred.

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Quizplus · Accepted Answer

When a party with the power to terminate an insurance policy decides to end the policy, it is known as cancellation. The other options may also apply in certain situations, but in general, cancellation is the most appropriate term to describe the termination of an insurance policy. A lapse refers to a situation where the policyholder fails to make required premium payments and the policy terminates automatically. Reformation refers to a situation where a court modifies a contract to reflect the intentions of the parties at the time of its creation, and rescission refers to a situation where a contract is cancelled due to fraud or other grounds.

When a Party with the Power to Terminate an Insurance