What Is a Lost Policy Release (LPR)?
A Lost Policy Release (LPR) is a formal document that absolves an insurance company of its obligations. When a policy is lost, destroyed, or retained without the original documents, the insured party signs an LPR.
Previously, cancellation of an insurance policy required returning the original underwritten documents to the insurer.
Key Takeaways
- A Lost Policy Release releases the insurer from liabilities.
- In the digital age, policy cancellations no longer necessitate returning physical documents, decreasing the need for Lost Policy Releases.
- An auto insurance switch may prompt a Lost Policy Release, often completed online.
When a policy is lost, the insured must prove the intent to cancel, usually through a Lost Policy Release, confirming the deliberate cancellation.
Understanding Lost Policy Releases (LPR)
Traditional language in Lost Policy Releases offers choices to either release or cancel a policy, with both options essentially serving the same purpose.
Modern insurance practices generally eliminate the need for Lost Policy Releases or returning original paperwork.
Some exceptions, like switching auto insurers, may still require a Lost Policy Release, usually completed digitally.
Different Types of Cancellation/Lost Policy Releases
When completing a Lost Policy Release, also known as a “cancellation/lost policy release,” the insured typically selects from three cancellation types: flat, pro-rata, and short rate.
Flat cancellations occur when coverage never begins, often resulting in a full premium refund.
Pro-rata cancellations allow the insured to receive a portion or all of the unearned premium after an early policy cancellation, representing the funds set aside for potential liabilities.
Short rate cancellations are invoked for non-payment, with Lost Policy Releases applied when replacing a policy. Retaining old policy documents can be prudent for potential issues with the new policy.