Cancellation Provision Clause

AAA

DEFINITION of '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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Cancelable Insurance

    This is insurance that may be canceled, at any time, by the insured ...
  2. Pro-Rata

    Used to describe a proportionate allocation. A method of assigning ...
  3. Insurance

    A contract (policy) in which an individual or entity receives ...
  4. Basket Retention

    An insurance policy that covers exposures to several different ...
  5. Counsel Selection Provision

    A liability insurance provision that allows the policyholder ...
  6. Computer Crime Insurance

    An insurance policy that provides protection from crimes committed ...
Related Articles
  1. Retirement

    What is a longevity annuity?

    Understand all the characteristics of a longevity annuity contract, the purpose of a longevity annuity and what type of investor it appeals to.
  2. Insurance

    How do I determine the face value of a life insurance policy?

    Read about how to determined the face value for any life insurance policy, and see what circumstances can trigger a change in face value.
  3. Options & Futures

    Is short selling a form of insurance?

    Explore short selling and put options. Learn how put options may be used as insurance to protect positions, and costs associated with using this method.
  4. Insurance

    Finding The Best Health Insurance You Can Get

    A close look at the pros and cons of Aetna vs. Cigna PPO health insurance helps you decide what's important for you.
  5. Insurance

    Avoid The No-Health-Insurance Penalty By Feb 15

    If you don't have health insurance, act NOW or you could owe penalties on your 2015 taxes, in addition to this year's.
  6. Insurance

    Rating Assurant Prepaid Vs. Delta PPO dental plans

    As more consumers – and dentists – join insurance plans, here’s help in choosing benefits that are right for you.
  7. Professionals

    What are some examples of common fringe benefits?

    Learn how offering fringe benefits can be a strategic recruitment and retention tool for employers and drastically increase total compensation for employees.
  8. Professionals

    What's the average salary of an actuary?

    Get insight into the intriguing career of risk analysis and forecasting. How much do actuaries make, and how is this field expected to fare in the coming years?
  9. Insurance

    How to Use a Waiver of Subrogation

    A waiver of subrogation means that a party to a contract waives the right to allow someone (usually an insurance company) to sue the other party to the contract in case of a loss.
  10. Insurance

    Who (Besides Retirees) Can Get Medicare?

    People think you need to be 65 before you're eligible for Medicare. But you might be eligible before then. Here's who can be covered – and when.

You May Also Like

Hot Definitions
  1. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  2. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  3. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  4. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  5. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  6. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
Trading Center