Cancellation Provision Clause

What Is a Cancellation Provision Clause?

A cancellation provision clause is a provision in an insurance policy that permits an insurer, or an insurance company, to cancel a property and casualty or a health care coverage policy whenever before its expiration date.

Life insurance policies don't contain cancellation clauses, and keeping in mind that health care coverage policies really do contain cancellation clauses, the clause doesn't permit the insurer to cancel the policy.

Understanding Cancellation Provision Clauses

By and large, a cancellation provision clause requires that at whatever point a party decides to cancel the policy, that party must send a written notice to the next elaborate party. The insurance company is likewise committed to refund any prepaid premium on a pro rata basis.

For instance, if the insured paid premium for a very long time and decided to cancel the policy toward the finish of the subsequent month, the insurance company is then required to work out the premium that applies to the last month and refund it to the insured party.

At the point when an insurance policy is subject to cancellation, an insurer is typically required to send a written notice 30 days in advance of the successful date. On the off chance that the notice doesn't contain a clarification for the cancellation, the company is frequently required to provide such a clarification recorded as a hard copy upon receipt of a written request from the policyholder.

Assuming an insurance policy is canceled prior to the expiration date, the insurer is required to refund any premium difference that is due. At the point when an insurance policy is subject to non-restoration, an insurer is required to follow procedures like cancellation.

Sample Cancellation Provision Clause Language

• "In the event of cancellation or non-restoration of the insurance managed by this coverage part, we consent to mail prior written notice of cancellation to the person(s) or organization(s) displayed in the Schedule."
• "This Policy might be canceled by the Company by providing for the Insured and to the extra insureds indicated on the certificates of insurance issued during the term of this policy, somewhere around Sixty (60) days written notice of cancellation or on account of non-installment of premium, no less than ten (10) days' written notice of cancellation."
• "Should any of the depicted policies be canceled before the expiration date thereof, the responsible Insurer will mail written notice as per the policy provisions to the certificate holder named inside the stated time periods of 30 days, with the exception of reason of non-installment of premium at 10 days. Inability to do so will impose no obligation or liability of any sort upon the Insurer, its Agents or Representatives."

Features

• Cancellation provision clauses require the party that decides to cancel the policy to send written notice to the next party.
• In the event that a policy is canceled prior to the expiration date, the insurer is required to refund any premium difference that is due.
• A cancellation provision clause is a provision in an insurance policy that permits an insurer to cancel a policy whenever before its expiration date.