Glossary · Insurance agency commissions
Policy reinstatement
A policy reinstatement puts a cancelled or lapsed policy back in force, usually after the overdue premium is paid, with or without a gap in coverage depending on the carrier.
What it means
A reinstatement usually follows a cancellation for non-payment: the insured pays what was due, and the carrier puts the policy back. Some carriers reinstate with no break in coverage; others leave a lapse between the cancellation and the reinstatement date. Reinstatement isn’t automatic either. In a Big “I” Virtual University article on costly coverage mistakes, Nancy Germond warns that the insurer may charge to reinstate a lapsed policy, and may re-underwrite or review the account and reject the reinstatement.
On installment policies the cycle can repeat within one term: a missed payment, a cancellation, a late payment, a reinstatement. Each turn can add its own commission lines.
How it shows on a commission statement
The cancellation produced a chargeback, and the reinstatement should reverse it, usually as a positive line at the original rate. The reversal can go wrong in four ways. It never comes, and the chargeback stays. It arrives at a different rate. The carrier pays the reinstated policy as new business. The two lines land months apart, and you never pair them.
Example
| Month | Transaction | On statement | Expected | Result |
|---|---|---|---|---|
| May | Cancellation, non-payment | −150.00 | −150.00 | OK |
| June | Reinstatement | 150.00 | Reversal missing | |
| Net | −150.00 | 0.00 | 150.00 to raise |
Each month’s statement looks clean on its own. The gap shows only when you follow the policy across both.
Common mistakes to check
- A chargeback left in place after the policy was reinstated.
- A reversal at a different rate from the original chargeback, or a reinstated policy paid as new business.
- Expecting the whole amount back when the carrier reinstated with a lapse. Premium for the gap, and the commission on it, may not return.
- Losing track of installment policies that cancel and reinstate more than once in a term.
Sources
- Big “I” Virtual University, Costly Coverage Mistakes, by Nancy Germond, March 6, 2023, last updated March 6, 2026. Retrieved October 7, 2026.
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