Which term describes the process by which the ownership of a policy is transferred to another person?

Which term describes the process by which the ownership of a policy is transferred to another person?

• A. Endorsement
• B. Renewal
• C. Cancellation
• D. Assignment

Answer: (D)

Ownership transfer of a policy is called assignment. It means all rights and interest in the contract—such as the right to premium payments and to file or receive claims—move from the current owner to a new owner. Endorsements modify or add coverage but don’t transfer ownership. Renewal simply extends the existing contract for another term. Cancellation ends the policy before its term expires. In some cases, an insurer may require consent for an assignment, but the term that describes transferring ownership is assignment.

Ownership transfer of a policy is called assignment. It means all rights and interest in the contract—such as the right to premium payments and to file or receive claims—move from the current owner to a new owner. Endorsements modify or add coverage but don’t transfer ownership. Renewal simply extends the existing contract for another term. Cancellation ends the policy before its term expires. In some cases, an insurer may require consent for an assignment, but the term that describes transferring ownership is assignment.