Definition - What does Continuous Coverage mean?
Continuous coverage refers having insurance coverage without any lapses. It is important in the context of both auto and health insurance, as it may have legal ramifications, leave the person susceptible to financial hardship due to an unexpected event, and affect premium rates and eligibility.
Insuranceopedia explains Continuous Coverage
Continuous coverage is important for many reasons. In terms of auto insurance, the majority of states require a minimum amount of coverage; thus, a lapse in coverage may result in legal troubles. Moreover, if an individual gets into an accident while uninsured, they will end up paying out of pocket to fix the vehicle. Lastly, they may also see a significant increase in their premium rates once they purchase a new policy. Therefore, it ends up being far more affordable to simply maintain coverage in the long run.
As for health insurance, the Health Insurance Portability and Accountability Act provides individuals with credit against the pre-existing condition exclusion for having continuous coverage. This means individuals with continuous coverage without any significant lapses can switch health insurance without being ineligible due to a pre-existing condition.