Effective Date/ Inception Date

The start date of a policy.

The policy’s inception date and effective date are interchangeable terms. They refer to the date at which coverage under the terms described on the insurance policy begins. It signals the start of the contract and, from then until the expiry date, both parties are bound to adhere to the conditions of the insurance policy.

However, in some cases, the inception date refers to the date on which the insured first enters into an insurance contract with a specific insurer, whereas the effective date marks the start of coverage under a specific policy. In these cases, the effective date is updated each time the policy is renewed, while the inception date remains constant.

These dates are important for two reasons. First, as of the policy’s effective date, the insured must begin adhering to the policy’s terms, conditions, and responsibilities. Otherwise, they risk not being fully covered by the policy. Second, any losses that occur prior to the policy’s effective (or inception) date will not be covered.

Efficacy and liquidated damages insurance

Engineering policy providing contingency cover for a contractor’s liability to pay liquidated damages for any delay in completion or performance failure due to contractor or supplier error in regard to work under the construction agreement.

Efficacy risk

The risk that a product may fail to perform its intended function. The failure may cause physical injury or damage or a purely financial loss, e.g. loss of production time. The product liability policy does not pay to replace the product or guarantee its efficacy but liability for injury, or damage consequent upon inefficacy, is insured. Pure financial loss due to inefficacy can be insured under a financial loss extension of a product liability policy or under product guarantee policy. See EFFICACY AND LIQUIDATED DAMAGES INSURANCE.