Cancellation Provisions

The policy terms that specify the conditions under which either the insurer or the insured may terminate the policy before the end of the policy period. Cancellation provisions typically require advance written notice, often 30 to 60 days, and define how unearned premium will be returned. Some states impose additional regulatory requirements on mid-term cancellations by the carrier, limiting the grounds on which an insurer may cancel to nonpayment of premium, material misrepresentation, or substantial change in risk.