Top 5 Questions about Cancellations

You have questions, we have answers.  

In this month’s blog we address your top 5 questions about insurance cancellations. Why they happen, how they happen and how you can possibly cancel your cancellation.  

What is A Cancellation? 

First, Let’s Define what a cancellation is.  

It actually functions as an endorsement on your policy, stating that your coverage will be ending on a certain day and time for a certain reason.  

You might ask what is an endorsement? An endorsement is documentation for any change in coverage on your policy.  

The most important detail is that the date of your coverage ending is changing from the expiration of the policy to whatever the date of the cancellation.  

Why Does A Cancellation Happen? 

A cancellation can happen for a variety of reasons. 

One of the more common reasons for cancellation are non-payment. If your payment is not received by the due date, then your policy is endorsed and a cancellation date is set. Sometimes, it can be that your payment is on its way from the bank and when it’s received, usually rescinded.  

There are also underwriting reasons that could be grounds for cancellation. Some examples of this are 

• Unsafe conditions or code violations discovered during inspection 
• Frequency of claims exceeds underwriting guidelines 
• New high-risk activities taking place on premises (Ex. Trampoline) 
• False information provided on the application, like failing to disclose prior claims or losses. 
• Failed to disclose business activities being conducted on the premises 

These aren’t all the underwriting conditions that could trigger a cancellation, but they give you a good idea as to the potential scenarios that could make your policy go into cancellation.  

How Much Notice Do I Get? 

How much notice you get can vary from state to state.  

In our experience in Florida, if it is for non-payment, you have up to 10 days to make payment.  

If it is for an underwriting reason, then you have 45 days to respond, unless it’s within the underwriting period (the first 90 days of the policy). In that case it can be reduced to 20 days.  

Can I Stop A Cancellation? 

Yes, you can.  

But that isn’t to say it’ll be easy.  

In terms of cancellation for non-payment, if you pay within the 10-day window, more than likely your policy will be reinstated.  

In the case of a underwriting cancellation, if you’ve remedied the situation that’s caused the cancellation (for example, replacing your roof after the underwriter determined it was too old) before the cancellation date and provide proof, there is also a chance of reinstatement.  

However, one thing to consider is that even if you do meet the requirement for reinstatement, the insurance carrier can deny reinstatement. Once a cancellation is issued, the ball is completely in the court of the insurance company. If they feel even after you’ve addressed the issue that the policy is not worth reinstating, they are within their rights to do so.  

That’s why we recommend being wary of cancellations and avoiding them so you don’t lose your power. 

What Happens When Your Policy Cancels? 

As you can imagine, nothing good. 

Your coverage will cease at 12:01 AM the day of cancellation, meaning that any claim after that time is ineligible to be filed and you’ll be fully responsible for any damages to your assets.  

If you have any premium left over, you’ll get a refund, unless the premium is fully earned.  

We hope this answered your questions about insurance cancellations! If you missed anything, be sure to contact us! We’re always open to answering any and all of all your questions.  

That’s what Dopazo & associates is all about. 

Honest simple education.