There are literally dozens of reasons why a business owner can get their commercial insurance policy cancelled. In this article, we will address a few of the most common reasons insurance companies cancel a commercial policy and ways the business owner can avoid having their policy cancelled.
Reason #1: Non-Payment of Premium
This one of probably the most common. 
But, why? In most cases, the business owner changes their payment method (new or lost credit/debit card) and they get a new card. Many business owners, believe that since their account is set to “Auto-pay” or is Direct Debit, with their insurance carrier, that any changes on their end are automatically applied to their account on the carrier end. THIS IS NOT THE CASE. I have seen no insurance carrier (like most businesses) automatically “know” when their insureds/customers change payment cards.
How does the insured avoid account issues when changing cards? SIMPLE – LET THE INSURANCE COMPANY KNOW – IMMEDIATELY. Simply call the billing department of your insurance carrier and notify them of the new card information. DONE. Prompt notification to the billing department can, in most cases, get your account updated immediately, and prevents any issues when their billing system attempts to draw on the insured’s account/card.
Reason #2: Audit Non-Compliance
To go over this one, let’s talk about what “Audit” means for a commercial insurance policy. The two most common policy audits are: 1) Annual Worker’s Compensation Policy Audit – This policy type is audited (without exception) annually, for the previous policy term. Basically, the insurance company sends the insured a short questionnaire asking about changes to business with a focus on payroll. 2 – General Liability Policy Audit – This policy type is audited less frequently, and focuses more on changes in annual sales revenues.
So, how does a business owner/insured end up being “Non-Compliant” with their audit? The most common reason we have seen is that the Audit Questionnaire in not returned to the insurance carrier on time, or at all.
This is CRTICAL! Whenever the insurance carrier asks the insured to complete and return any audit forms, there is usually a deadline of 5-10 business days. How do you avoid being Non-Compliant? SIMPLE…COMPLETE AND RETURN YOUR AUDIT PAPERWORK IMMEDIATELY. Doing so will save the business owner much frustration and possibly even audit penalties (Typically Annual Premium x2) and policy cancellation.
Reason #3: Carrier Line Removal
Actually, insureds have no control over this one. From time to time, insurance companies may no longer offer a certain line of coverage in an city or region. When that occurs, they will send policy “Non-Renewal” notices to all of their insureds letting them know their policy will not renew. When this happens, just call us and we will find you another insurance carrier.
To wrap up, the best way to prevent early policy cancellation is just stay on top of your billing and audit requests. If you are able to do that, the chances of getting a cancellation notice can be greatly reduced.
