Notice of Cancellation

Notice of Cancellation

Suppose a vendor purchases an insurance policy that meets a landlord’s insurance requirements, and the landlord then decides to begin working with the vendor. What’s to stop the vendor from cancelling the insurance policy right afterwards to avoid paying the monthly premium? The landlord would never find out, right?

That depends if the insurer issued a Notice of Cancellation endorsement.

What is Notice of Cancellation?

In the insurance world, a notice of cancellation provision obligates insurers to provide advance written notice to the Certificate Holder if an insurance policy is cancelled or not renewed.

The most common required cancellation notice period is 30 days, though, in some cases, up to 60 days may be required. In case of cancellation or non-renewal of an insurance policy, a physical notice is mailed to the address of whatever entity appears as the Certificate Holder on the COI, unless an email address is written there instead.

A Notice of Cancellation provision is already baked into most insurance policies by default, but, in practice, most insurers fail to fulfill this duty unless obligated to do so by written contract.

For this reason, landlords often require their tenants and vendors to provide a 30 Days Notice of Cancellation Endorsement as an extra layer of protection.

For this reason, landlords often require their tenants and vendors to provide a 30 Days Notice of Cancellation Endorsement as an extra layer of protection.

Cancellation terms on ACORD 25

Acord 25 contains the terms of cancellation as follows:

In the term shown above, it is important to note that notice will be delivered in accordance with the policy provisions. Policy provisions are clauses in an insurance contract that lay out the exact conditions for which coverage is provided and for what amounts, along with exclusions and other restrictions.

Since the cancellation term indicates that notice will be given in accordance with the policy provisions, the insured must specify the exact condition of cancellation desired. That is why the 30-day period is very common, so there is enough time to take out a new insurance without going through the risk of an uninsured period.

Click here to learn how to find Notice of Cancellation on COI while auditing!