We've had a couple of questions about the cancellation clause in our terms and conditions so here is the wording we have with some comments interspersed.
CANCELLATION
You may cancel this certificate by writing to us and stating the future date that you wish the cancellation to be effective.
We may cancel this certificate at any time within the first sixty (60) days of the initial Period of Insurance.
To cancel this certificate, we will mail you a notice of cancellation to the named insured shown on the application at the last known address shown in our records. If we cancel this certificate within the first sixty (60) days after the Effective Date, notice of cancellation will be mailed at least thirty (30) days before the Effective Date of the cancellation.
After this certificate has been in effect for more than sixty (60) days, notice of cancellation due to any reason other than nonpayment of premium will be mailed at least sixty (60) days before the effective date of cancellation. If we cancel this certificate at any time due to nonpayment of premium, notice of cancellation will be mailed at least ten (10) days before the Effective Date of the cancellation.
After this certificate is in effect for more than sixty (60) days, or if this is a renewal or continuation certificate, we may only cancel for one or more of the following reasons:
- You fail to pay your premium by the due date in accordance with the certificate terms. [if you don't pay, we can't cover you – but you do have a 30-day grace period if your credit card plays up or something]
- The certificate was obtained through a material misrepresentation in your application, the content of which is specifically incorporated into and as a material term of this certificate. [ e.g. if you say your dog is mixed breed and it's actually a purebred dog (the premiums might be very different), then we can cancel]
- The risk originally accepted has measurably increased. [see discussion below]
We have agreed to issue a new certificate with the same or an affiliated company. [we are reissuing your certificate for some reason, perhaps if we changed underwriters and this is a requirement of the transaction instead of waiting until your policy renews]
- The Department of Insurance relevant to the state the certificate is governed by determines that continuation of the certificate could place us in violation of the state's insurance laws. [required by the Department of Insurance just in case they change the rules on us]
- You fail to comply with the certificate terms and conditions in a manner that prejudices or negatively impacts our ability to properly assess or evaluate the claim or other material rights we have under the certificate. [ e.g. you refuse to give us your pet's health history so we can underwrite your claim appropriately]
With respect to cancellation, this certificate is neither severable nor divisible. Any cancellation will be effective for all Coverage for all persons and all Pets. If this certificate is canceled, Coverage will not be provided as of the effective date and time shown on the notice of cancellation.
Item 3 is the one that looks the most unfriendly so I wanted to give you an example. I had to pick one for auto insurance since for the life of me, I couldn't come up with one for pet insurance but I wanted you to see what it's all about.
If we insured dump trucks under normal use and suddenly the US Government conscripted them all to help clean up an environmental spill, we could cancel the policy mid-term. In that situation, the risk has measurably changed from what we priced the policy for [of course, we do not sell dump truck insurance so do not call me for that!]
So in summary, this clause applies to overall risk characteristics of a homogeneous group, not to a specific policy within that group.
Hopefully that clarifies some of the mystery around the cancellation clause.
