Q. We have an insurance carrier canceling a business auto policy, mid-term because of loss control. Can they cancel mid-term?
A. If the carrier is admitted, cancellation is statutory for most policies. If the carrier is surplus lines statutory, statutory cancellation provisions do not apply and cancellation is whatever is written in the policy.
Statutory cancellation provisions apply to Homeowners, Dwelling Fire/Farm, Commercial Auto/Garage, Commercial Liability (GL, Professional, and Umbrella), BOP and Commercial Package, Personal Auto and Workers’ Compensation. The statutory provisions can be either included in the policy or amended by endorsement so it’s important to look for any endorsement that may change the cancellation wording in the actual policy.
Midterm cancellation of a BAP written with an admitted carrier, can only be canceled for 5 reasons: (i) fraud in obtaining coverage, (ii) nonpayment, (iii) increase in hazard within insured’s control which produce an increase in rate, (iv) loss of reinsurance, (v) approved by TDI for company solvency.
View more information on cancellation and non-renewal provisions.