Insurance Policy Cancellations: What You Need to Know

Insurance Coverage Cancellations

Cancellation of an insurance policy typically occurs when the policy holder fails to uphold their end of the contract or a breach of contract has been discovered. The most common reasons for a policy cancellation are failure to pay a scheduled premium or fraud and misrepresentation. Insurance regulators in many states limit the ability of an insurance carrier to cancel a policy or discontinue

coverage on an issued insurance policy. Cancellation provisions included in a contract are also, often, limited by State regulators.

Policy Terms and Policy Renewals

Property and liability policies are issued for a policy term or a specified period of time. Cancellation provisions for a given policy only apply during the policy term. Insurance carriers decide, near the term end, whether to discontinue or renew the policy. With the exception of reasons associated with protected classes (groups protected by constitutional law from discrimination) an insurance company can decide to not renew a policy for any reason. If an insurance carrier decides not to renew a homeowners or renters insurance policy,
Written notification of a policy cancellation is typically provided or is required to be provided in most states.