What is ‘Stoppage Provision Clause’
A cancellation provision clause is a provision in an insurance conduct that permits an insurer or an insurance company to cancel a property and dead or a health insurance policy at any time before its expiration date. Way of life insurance policies do not contain cancellation clauses, and while health security policies contain cancellation clauses, the clause does not allow the insurer to strike the policy.
BREAKING DOWN ‘Cancellation Provision Clause’
Generally, a suppression provision clause requires that whenever a party chooses to nullify the policy, that party must send a written notice to the other one. The assurance company is also obligated to refund any prepaid premium on a pro rata heart. For example, if the insured paid premium for three months and chose to make up for the policy at the end of the second month, the insurance company is required to calculate the dear that applies to the last month and refund it to the insured party.
When a procedure is subject to cancellation, an insurer is usually required to send a written review 30 days in advance of the effective date. If the notice does not restrain an explanation for the cancellation, the company is often required to provide one in writing upon take of a written request from the policyholder. If a policy is canceled prior to the closing date, the insurer is required to refund any premium difference that’s due. When a practice is subject to non-renewal, an insurer is required to follow procedures similar to abolition.
Sample Cancellation Provision Clause Language
- “In the event of cancellation or non-renewal of the bond afforded by this coverage part, we agree to mail prior created notice of cancellation to the person(s) or organization(s) shown in the Schedule.”
- “This Means may be canceled by the Company by giving to the Insured and to the additional insureds indicated on the certificates of surety issued during the term of this policy, at least Sixty (60) days canceled notice of cancellation or in the case of non-payment of premium, at least ten (10) days’ dash off notice of cancellation.”
- “Should any of the described policies be canceled before the close date thereof, the issuing Insurer will mail written regard in accordance with the policy provisions to the certificate holder named within the stated stretch frames of 30 days, except for reason of non-payment of premium at 10 days. Neglect to do so shall impose no obligation or liability of any kind upon the Insurer, its Substitutes or Representatives.”