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How to Obtain a 30-Day Notice of Cancellation
Despite the New ACORD Form
115 E. 57th Street, 11th Floor | New York, NY 10022 | OFFICE 862.242.5500
www.bcsaudit.com
How to Obtain a 30-Day Notice of Cancellation
Despite the New ACORD Form
LIFE’S CONSTANT = CHANGE
Over the past eighteen months, since ACORD made their infamous changes to the ACORD
25 (2009/09) Certificate of Insurance, many Insurers and Insureds, Brokers and Agents, as
well as Certificate Holders have changed the way they manage ACORD certificates and the
information provided therein. One subtopic that is still in flux is the ACORD 25 (2009/09)
CANCELLATION provision which reads:
“Should any of the above described policies be cancelled before the expiration date thereof,
notice will be delivered in accordance with the policy provisions.”
How can you best address this issue with your vendors, when written contracts require
these vendors to provide thirty (30) days notice of cancellation for insurance policies?
We last wrote about this topic in early January 2011 and offered a handful of options, some
of which appear to be gaining support in the insurance marketplace. We will examine two
of these options in more detail below.
OPTION 1: INSURER ISSUED CANCELLATION ENDORSEMENTS
The best option for Certificate Holders is to obtain a Notice of Cancellation Endorsement
from the vendor’s Insurer(s) specifically scheduling the Certificate Holder. Endorsements
modify the insurance policy contract and if written properly, the vendor’s Insurer(s) will
provide the desired notice of cancellation.
One such Notice of Cancellation endorsement seen recently reads:
“In the event of cancellation or non-renewal of the insurance afforded by this Coverage
Part, we agree to mail prior written notice of cancellation to the person(s) or organization(s)
shown in the Schedule.”
115 E. 57th Street, 11th Floor | New York, NY 10022 | OFFICE 862.242.5500 | www.bcsaudit.com
How to Obtain a 30-Day Notice of Cancellation
Despite the New ACORD Form
The schedule then includes the Certificate Holder’s Name, Address where the notice is to be
mailed and the number of days advanced notice is to be given.
Another Notice of Cancellation endorsement seen recently from a different Insurer reads:
This Policy may be canceled by the Company by giving to the Insured and to the additional
insureds indicated on the certificates of insurance issued during the term of this policy, at
least Sixty (60) days written notice of cancellation or in the case of non-payment of premium, at least ten (10) days’ written notice of cancellation.
Understand that these types of endorsements are not generally available and are used sparingly by Insurers, but we view this as a positive sign that the demand for affirmative Notice
of Cancellation by Certificate Holders is impacting Insurers looking for a way to differentiate
themselves.
OPTION 2: A MISCELLANEOUS ATTACHMENT TO THE ACORD 25 CERTIFICATE
“Should any of the described policies be cancelled before the expiration date thereof, the
issuing Insurer will mail written notice in accordance with the policy provisions to the certificate holder named within the stated time frames of 30 days, except for reason of nonpayment of premium at 10 days. Failure to do so shall impose no obligation or liability of
any kind upon the Insurer, its Agents or Representatives.”
If this language looks familiar, it is close to how the pre 2009/09 ACORD 25 Certificate
CANCELLATION language read. While not as clean cut as the first option, we view this as a
positive step in providing the desired Notice of Cancellation to Certificate Holders.
IN SUMMARY
We believe the ACORD changes to their Cancellation provision, while causing a tremendous
amount of heartache to all parties involved, is having a positive effect (and possibly the
desired effect) of putting Insurers back in the business of managing cancellation notices on
behalf of their Insured’s who have contractually agreed to provide such notice.
We will continue to monitor this issue and provide updates to you, our readers, in the hope
of keeping you abreast of what we see in the insurance marketplace. We would appreciate
your thoughts and feedback on this issue as well, so feel free to call us or send us an email
at [email protected].
115 E. 57th Street, 11th Floor | New York, NY 10022 | OFFICE 862.242.5500 | www.bcsaudit.com