What is ‘Cancellation Provision Clause’
It is a provision in an insurance policy that permits an insurer or an insurance company to cancel a property and casualty or a health insurance policy at any time before its expiration date. Life insurance policies do not contain cancellation clauses, and while health insurance policies contain cancellation clauses, the clause does not allow the insurer to cancel the policy.
Explaining ‘Cancellation Provision Clause’
Generally, a cancellation provision clause requires that whenever a party chooses to cancel the policy, that party must send a written notice to the other one. The insurance company is also obligated to refund any prepaid premium on a pro rata basis. For example, if the insured paid premium for three months and chose to cancel the policy at the end of the second month, the insurance company is required to calculate the premium that applies to the last month and refund it to the insured party.
Further Reading
- Cancellation strategies in commercial real estate leasing – onlinelibrary.wiley.com [PDF]
- Abuse of Circumstances as a Reason for the Cancellation of Financing Agreements – www.um.edu.mt [PDF]
- Determinants of corporate leasing policy – onlinelibrary.wiley.com [PDF]
- When is compensation payable for breach of a stabilisation clause? The case for the cancelled mining development agreements in Zambia – repository.up.ac.za [PDF]
- Unpacking the Cancellation of Indebtedness Income Doctrine: Towards Economic Reality-Based Taxation – heinonline.org [PDF]
- Changing Leases into Investment-Grade Bonds: Financial Alchemy and Cost Reduction in Real Estate Finance – www.aresjournals.org [PDF]
- Contracting with spatial externalities and agency problems The case of retail leases – www.sciencedirect.com [PDF]
- Retail leasing: the determinants of shopping center rents – onlinelibrary.wiley.com [PDF]
- Bankruptcy costs and the financial leasing decision – www.jstor.org [PDF]
