What must an insurer do if it accepts a renewal premium payment that extends beyond the policy's maximum age limit?

When an insurer accepts a renewal premium payment that extends beyond the policy's maximum age limit, it is required to continue the coverage for the accepted period. This is based on the principle of good faith, which is integral to the insurance contract. Accepting the premium implies that the insurer acknowledges and agrees to extend the policy under those terms, unless there are specific stipulations indicating otherwise.

Continuing coverage despite the policyholder exceeding the maximum age limit maintains the contractual relationship and honors the obligations that the insurer has to the policyholder. It reflects a commitment to the terms of the policy as they were in force at the time of renewal. Moreover, upon acceptance of the premium, the insurer cannot impose new conditions that contradict the existing coverage.

This situation typically requires that the insurer must take responsibility for the implications of accepting the premium, ensuring that the policyholder remains protected during the continued coverage period. Adjusting policy terms, returning the premium, or terminating the policy immediately would undermine that protection and violate the insurer’s obligation to honor the renewal process.