Coverage Gap

Example

“After leaving her job, Sarah experienced a coverage gap in her health insurance until her new employer's policy took effect three months later.”

Memory Tip

Picture a bridge with a missing section - that's your coverage GAP where you could fall through without protection.

Why It Matters

Coverage gaps can leave individuals financially vulnerable to unexpected events, potentially resulting in significant out-of-pocket expenses. Even brief gaps can have serious consequences, as accidents and illnesses don't wait for convenient timing.

Common Misconception

Some people believe they can easily go without insurance for short periods without consequences, or that they can retroactively purchase coverage after an incident occurs. However, insurance policies typically don't cover events that happen during gap periods, regardless of when you purchase new coverage.

In Practice

John's auto insurance expired on March 1st, but he didn't renew until March 15th. During this 14-day coverage gap, he was in a minor accident that caused $3,500 in damages. Since he had no active policy, he had to pay all repair costs out of pocket, whereas his previous policy would have covered the damages with just a $500 deductible.

Etymology

The term emerged in insurance terminology during the mid-20th century, combining 'coverage' from insurance language with 'gap' meaning an empty space or interval.

Common Misspellings

Related Terms

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Other insurance terms you should know

See Also