What is required from an insurer when they cancel a policy?

When an insurer cancels a policy, it is required to provide advance written notice to the policyholder and to calculate any unearned premium that is owed to the insured. This is a protective measure that ensures the policyholder is informed about the termination of their coverage and receives any refund for the unearned portion of the premium they have paid.

The requirement for advance written notice gives the insured an opportunity to secure new insurance coverage before their existing policy is terminated, thereby avoiding any lapse in coverage. The calculation of unearned premiums ensures that the insured is reimbursed for the portion of the premium that corresponds to the unused coverage period, maintaining fairness in the transaction.

This procedure is essential in the context of regulatory compliance and consumer protection within the insurance industry, reinforcing the obligation of insurers to communicate transparently with their clients.