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
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 I write a notice to cancel my 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 polite cancellation letter? ›
Write using a formal business format and specify the subscription you're canceling. Give a reason for the cancelation and request confirmation. Cancel a business contract by writing a letter stating your intentions, explaining why, and including a final payment for services. End on a friendly note.
How do I notify my insurance company of cancellation? ›
Call your provider.
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.
How do you write an insurance cancellation letter? ›
The reason for cancellation is {reason you want to cancel your policy}. The effective date of policy cancellation is {cancellation date}. Please stop automatic payments and refund the unused portion of my premium directly to me the address stated above. I also request written confirmation of the cancellation.
What is the correct way to write cancellation? ›
Cancelation or cancellation
Cancellation (double “l”) is a noun used to refer to an act or instance of canceling something. This is the standard spelling in both UK and US English. While “cancelation” (one “l”) occurs occasionally in US English, it's rare and best avoided.
What is an example of a cancellation notice? ›
I am reaching out to inform you that, unfortunately, we must cancel the [Service Name] that was scheduled for [Date]. This is due to [brief reason for cancellation], and we understand this may disrupt your plans. We sincerely apologize for any inconvenience this may cause.
How do you say cancel in a professional way? ›
I regret to inform you that due to unforeseen circ*mstances, I am forced to cancel our appointment. I understand the importance of this meeting and deeply regret that I will not be able to attend it as planned. However, I would like to propose a new date. Could we reschedule our meeting for [new date and time]?
How do I write a letter of termination to an insurance company? ›
Sample Insurance Cancellation Letter
I'm writing to seek termination of my insurance policy, which will take effect on [enter cancellation date]. I'd appreciate it if you could provide me formal confirmation of the cancellation within the next 30 days.
What is a notice of cancellation insurance? ›
A notice of cancellation simply requires your vendors to alert you when they cancel their insurance or decide not to renew it. Typically, the people who will be notified of this cancellation are the additional insureds or any other vested parties listed on the COI.
Generally, insurers will refund you the money for the unused portion of your policy, assuming you paid in advance. However, depending on your state, and when you cancel, your insurer may charge a cancellation fee.
What is a valid reason to cancel an insurance policy? ›
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.
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.
How do I cancel my insurance plan? ›
You can contact your current health insurance company directly if you're canceling a privately purchased plan. Your health insurer's phone number is on your policy, health insurance card, and premium bills. Health insurance carriers may allow you to cancel over the phone.
What is the required notice for insurance cancellation? ›
In most states, an insurance company must give a policyholder written notice of cancellation at least 30 days before canceling the policy. 1 The policy contract specifies the reasons the insurer can cancel the policy and the time frame and method in which it can do it.
How do you write an email to surrender an insurance policy? ›
I am _____________ (your name) holding an insurance policy having policy number ________________(policy number) from your company ( insurance policy company name). All the premiums are paid till date and due to_____________________ (mention the reason of surrender), I would like to surrender my policy.
How do I terminate my insurance contract? ›
Canceling your term policy couldn't be easier: just stop paying your premium and write a letter or call your insurer to let them know you are canceling the policy. Check the website of your insurer, too — there may be a form there you can fill out to terminate your policy.
