If you need to cancel a small business insurance policy for some reason, be sure to follow your insurer's procedures and to file a written cancelation letter.
Nothing in life is forever. That includes your small business insurance, which you may need to cancel at some point. If that becomes necessary, be sure to follow your insurer’s procedures and file a written insurance cancellation letter.
When should you cancel a business insurance policy?
Canceling a small business insurance policy is never a decision to make lightly, especially in today’s risky business environment. It’s important to make sure your business and personal finances are not exposed to risk before you cancel an existing policy. Do research beforehand and compare quotes from multiple carriers if you plan to replace your policy with something better, cheaper, or more appropriate.
Reasons to consider canceling your insurance policy:
- You believe you’re paying too much for insurance.
- Your business has changed, and you need different coverage.
- You’re moving out of state, and your current insurer doesn’t offer policies in your new location.
- You’re unhappy with the service your insurer provides.
- You want to combine separate policies into a less expensive bundled policy.
Consider the risks of canceling insurance
Once you decide to cancel your policy, consider four implications for your business:
Will you expose your business to lawsuits or other expensive claims? Canceling your insurance without having a new policy in place means you’ll have no safety net against lawsuits or other expensive losses.
Will you create a coverage gap by canceling a claims-made insurance policy? A claims-made policy can cover events that happened in the past, but you must have continuous coverage, even if you switch carriers. This policy type is often found with errors and omissions, professional liability, and directors and officers insurance, which require you to have active insurance to trigger coverage for an insurable event that happened in the past. If you decide to cancel your policy, talk to your insurer about purchasing an optional extended reporting period (ERP) or tail coverage. This feature gives you the right to file for benefits even though you canceled your claims-made policy.
Will you save money but weaken your insurance safety net? Saving money on insurance is important. But if it comes at the cost of leaving your company unprotected, it may be an unwise decision in the long run.
Will adjusting your coverage meet your needs better than canceling your policy? In some cases, you may be able to adjust your coverage to meet your needs without canceling your policy. For example, if the nature of your business has changed or you have moved to a new location, you can potentially modify your coverage to reflect your new situation.
Still wish to cancel? Send a written insurance cancellation letter
If you have a legitimate reason to cancel and it won’t subject your business to extra risk, then it’s time to file a written cancellation notice. But before you do, check your policy to see if your insurer has any cancellation requirements. For example, your insurer may need your letter to go to a specific department, or it may require a certain number of days’ notice before it can deactivate your coverage.
Once you’re clear on what’s required, it’s time to draft your insurance cancellation notice. Your letter should include:
- Date of notice
- Insurance company name and address
- Appropriate department name and contact person
- Insured’s name (found in the declarations page of the policy)
- Insured’s mailing address
- Insured’s phone number
- Policy number
- Coverage period (on declarations page)
Next, draft the body of the letter. The body should include:
- The date you would like your policy to be canceled
- A request for a refund of unused premiums
- A statement that you no longer authorize the insurer to withdraw funds from your payment account for premiums (if applicable)
- A request for written confirmation that the insurer will execute your request by the desired date
Compare new policies for your business with Insureon
It’s a good idea to shop the market periodically to see if you can save money on your business insurance, but don’t do it too often. If insurers see that you switch companies every year, they may decide not to cover you, or they may increase the premium they charge.
Insureon has helped thousands of small business owners compare multiple quotes from different U.S. carriers at one online destination. Start a free online application today to save time shopping for insurance.
FAQs
Reason for Cancellation: Briefly explain why you cancel the policy, though this is optional. Refund Request: If applicable, request a refund of any prepaid premiums. Confirmation Request: Ask for written confirmation of the cancellation and the final effective Date.
How to write a letter of insurance cancellation? ›
Reason for Cancellation: Briefly explain why you cancel the policy, though this is optional. Refund Request: If applicable, request a refund of any prepaid premiums. Confirmation Request: Ask for written confirmation of the cancellation and the final effective Date.
How do you write a polite cancellation letter? ›
Step-by-Step Guide to Writing a Cancellation Letter
- Step 1: Start with Your Contact Information. ...
- Step 2: Include the Date. ...
- Step 3: Address the Recipient. ...
- Step 4: State the Purpose of the Letter. ...
- Step 5: Provide Details of the Cancellation. ...
- Step 6: Explain the Reason for the Cancellation.
Examples of valid reasons for cancellation include:
Fraudulent claims made by policyholder. Dishonest documentation or deceit by policyholder. Indications that a policyholder is a risk to the insurance company.
What is the format for cancellation of insurance policy? ›
Dear [Recipient's Name], I am writing this letter as a formal request to cancel my life insurance policy with your company. My policy number is [Policy no], and please make it effective from [mention date]. I further request that you cease all charges associated with the premium and return the payments made earlier.
How do you write a good cancellation policy? ›
An effective cancellation policy should detail time frames for cancellations, specify associated late cancellation fees, address last-minute cancellations, and provide guidance for handling unavoidable emergencies.
How do I write a letter of termination for insurance? ›
Dear [ Name ], This letter will serve as notice that I am terminating my contract with [ insert name of plan ] effective [ insert date ]. Pursuant to [ insert section or article of contract ], I am providing 90 days' notice with this letter.
What is the correct way to write cancellation? ›
The word cancellation is solidly spelled with two l's, no matter where you are.
How do you say cancel in a professional way? ›
Avoid empty phrases and use clear and direct language. Expressions such as "Unfortunately, I have to cancel the appointment" or "I regret to inform you" signal that you understand the importance of the appointment and that the cancellation was not an easy decision.
How do you cancel something respectfully? ›
Here are some phrases you can use to cancel plans in a polite and respectful manner:
- “I'm really sorry, but something unexpected came up. ...
- “I apologize for the inconvenience, but I won't be able to make it. ...
- I am so sorry, but I have a conflicting commitment and won't be able to join you.
How to cancel
- Step 1: Contact your insurer by phone, email, online chat, or by visiting an agent's office.
- Step 2: Submit a written notice if your insurance company requires it. ...
- Step 3: Follow the specific instructions from your insurance provider.
Internal appeal: If your claim is denied or your health insurance coverage canceled, you have the right to an internal appeal. You may ask your insurance company to conduct a full and fair review of its decision. If the case is urgent, your insurance company must speed up this process.
Is cancelling insurance easy? ›
For the most part, canceling a policy with your insurance provider is a simple process with minimal financial risk. But there's an important caveat: You should avoid an insurance lapse at all costs.
How to write a letter canceling insurance? ›
Your letter should include:
- Date of notice.
- Insurance company name and address.
- Appropriate department name and contact person.
- Insured's name (found in the declarations page of the policy)
- Insured's mailing address.
- Insured's phone number.
- Policy number.
- Coverage period (on declarations page)
How to write a cancellation letter for an event
- Format the letter or use a letter template. ...
- Identify the specific event you're referencing. ...
- Thank the guests for their understanding. ...
- Provide information about rescheduling. ...
- Inform recipients about potential refunds. ...
- Conclude and sign the cancellation letters.
How to define a cancellation policy?
- A cancellation fee if the guests cancel their reservation.
- A prepayment/guarantee payment fee. The prepayment amount is the same as the cancellation amount.
- A No show penalty.
The phone number likely will be found on your insurance card, as well as on the company's website or app. This is often the quickest method, although you still may have to sign a cancellation notice or other documents to make it official. Mail or fax your cancellation.
How do I write a letter of cancellation order? ›
I received the goods on 20 January 2022. Under the above Regulations, I would like to cancel the order and ask you to provide a full refund within 14 days. Please contact me within 14 days to arrange a collection or return of the goods.
How do you request to terminate an insurance contract? ›
Send a letter to your insurer notifying it of your decision to terminate the contract. Remember: if more than one insured is named on the contract, the letter must be signed by each one of them.
