How to Write an Insurance Cancellation Letter (Examples)

An insurance cancellation letter is a letter that notifies an insurance company of our desire to cancel contracted insurance or not renew the current contract. It is a technical, formal document. Most insurers have a format. However, it is also valid that we present that letter requesting the cancellation of insurance. Also, generally, these letters must be exhibited before the insurance company within a period of time. If possible, have an acknowledgment of receipt, generally in a copy of the letter delivered, which will prove the request was made.

When Should You Cancel Insurance

It is almost better to say than to do when it comes to canceling a policy, and most people are aware that without it, the likelihood of acquiring a liability is as high as 100%. Canceling an insurance policy is never an easy choice to make, particularly in today’s risky business climate. Before you terminate an established scheme, double-check that your company and personal finances are not at risk.

If you want to substitute your strategy with something different, cheaper, or more friendly, do your homework and match quotes from various carriers. Accidents and unexpected accidents may strike at any moment and without notice, and the liabilities that come with them can devastate your finances. However, sometimes canceling your insurance coverage is preferable to paying annual fees that you don’t think are worthwhile.

Below are some of the situations in which canceling an insurance policy is a better option:

Paying too much on it

It happens when you think you are overpaying for the policy, affecting your overall budget and planning. In this situation, you may decide to cancel the insurance policy entirely or partially.

Moving somewhere else

As the name suggests, it happens when you are moving out of state and the insurance company does not offer its services in that particular state.

Unsatisfied with services

If you are dissatisfied with the new insurance provider’s offer, cost, or operation, it is a good enough reason to cancel the insurance.

Changing business

If your business has expanded, shrunk, or modified in some other way, you may need to switch to a new insurance plan or company.

Want policies in an economical policy bundle

You are most likely to cancel your present insurance policy if you discover a more cost-effective insurance plan with better security and coverage.

Points to Ponder Before Cancelling Insurance

An insurance plan protects you by providing financial assistance if any unforeseen event or accident occurs. Therefore, a few things must be considered before the insurance cancellation:

Exposing your business to lawsuits

You will expose your business to lawsuits if you cancel your insurance policy. It can happen if an unforeseen accident happens or someone files a complaint against you. So, it’s recommended to find an alternative insurance policy before canceling the insurance plan.

Saving money but reducing the insurance safety net

It is vital to save money on the insurance plan. However, if it comes at the expense of keeping your business vulnerable in the long term, it could be a flawed idea.

Coverage gap

Even if you change providers, you should have adequate coverage because a policy claim could cover events that previously happened. This type of policy is frequently associated with inconsistencies, legal fees, and compensation for shareholders and others. It requires you to have active insurance to trigger coverage after a reimbursable event that has previously happened.

Coverage adjustment as an alternative

In some circumstances, you would be able to customize your coverage to meet your needs without canceling your policy. You will be able to adjust your protection to suit your present conditions if your market order has changed or if you have relocated, for example.

How to Write (What to Include?)

The insurance cancellation letter is both a formal letter and a legal document, so it must comply with more formalities than a standard letter.

Following are some of the key components of an insurance cancellation letter:

Subject

The purpose of the subject line is to specify that what we are addressing is an insurance cancellation letter. The type of insurance that we are cancelling will be indicated, especially when we have more than one contract.

Date of notice

It is the date you, as the insured client, are sending the cancellation letter as a notice to the insurance company.

Information about the insurance company

In this section of the letter, the name, physical address, etc. of the insurance company are mentioned. This component ensures that you are reaching out to the right company and enhances the credibility of the letter in terms of professionalism and format as well.

Department and employees addressed

This component serves to indicate a particular department’s name and the name of the contact person who sold you the insurance plan, the sub-directorate in charge of our insurance, or the head of the area.

Insured’s name

The name of the insured person (i.e.; you) indicates the person who has bought an insurance plan from the company.

The insured’s mailing address

It indicates the physical mailing address of the person who has bought an insurance plan from the company.

Contact number

The phone number of the person who has bought an insurance plan from the company (i.e you) must be included so that the company may have multiple sources of reaching out/responding to you.

Policy number

It indicates the insurance company’s policy number at the time of purchase of the insurance policy.

Insurance type

The kind of insurance you bought must be included in your insurance cancellation letter

Coverage period

The coverage period is the period during which the insurance policy will remain valid before cancellation.

Signature

It is always requested that the signer be the owner of the insurance. In case you cannot do it, a power of attorney is required, which will be attached in original or certified copy, and in place of a signature, the letters PA (which means “by authorized”) and the applicant’s signature.

Free Template For Insurance Cancellation Letter

Practical users

This template is crafted for those who need to formally and professionally communicate with their insurance provider to cancel an insurance policy. It’s the perfect tool for situations where you’ve found a more attractive insurance offer, your circumstances have changed, or you’re simply not satisfied with the current service.

Key components

• The [Subject: Cancellation of Insurance Policy [Policy Number]] placeholder provides a clear subject line, ensuring that the purpose of the letter is immediately evident to the recipient. Including the policy number aids in the quick identification of the policy to be canceled.
• The salutation, “Dear [Insurance Company’s Name or Insurance Agent’s Name],” allows you to address the recipient appropriately. If you have a specific contact person, you can personalize the salutation for a more targeted communication.
• The template guides you to state the request for cancellation clearly, with placeholders for [Policy Number], [Desired Cancellation Date], and [briefly state your reason]. These placeholders ensure that you provide all necessary details for the cancellation request, such as the specific policy and the reason for cancellation.
• The template includes a section requesting written confirmation of the cancellation and the final effective date. This ensures that you have documentation of the cancellation for your records and helps avoid any misunderstandings.
• The [Your Phone Number] and [Your Email Address] placeholders prompt you to enter your contact information. This is important in case the insurance company needs additional information or clarification regarding your cancellation request.
• The placeholders for [Your Signature] and [Your Printed Name] guide you in closing the letter professionally. If sending a hard copy, the signature adds a personal touch, and the printed name ensures legibility.

Sample Letters

Here are types of Insurance Cancellation Letter:

Business Insurance Cancellation Letter

Insights

Ashley Ruba’s letter clearly states her desire to have the Comprehensive General Liability Insurance policy canceled. The letter is well-structured, provides clear information, and maintains a respectful and professional tone throughout.

Such a letter is crucial in the context of business operations where changes in the business model, location, or risk factors might necessitate alterations in insurance coverage. The letter serves as a record of the business’s proactive management of its insurance policies and can be important for future insurance dealings or audits.

Key Components

• Addressing the recipient as “Dear Ms. Jane Smith” adds a personalized touch, ensuring that the letter is directed to the appropriate person at XYZ Insurance Company.
• The subject, “Cancellation of Comprehensive General Liability Insurance Policy No. ABC123456,” is specific and directly conveys the purpose of Ashley Ruba’s letter.
• The letter maintains a polite and professional tone throughout, expressing gratitude for past services and assistance, and using respectful language.
•  Ashley starts by clearly stating her intent: requesting the formal cancellation of her Comprehensive General Liability Insurance policy, and providing the policy number for easy identification.
• The letter provides a detailed and specific reason for the cancellation, citing a significant change in business operations as the driving factor. This explanation helps the insurance company understand the rationale behind the request.
• Ashley provides both her mailing address and email address, offering multiple channels for written confirmation. This ensures efficient communication and demonstrates cooperation.
• Ashley proactively inquires about the possibility of a refund for the unused portion of the premium, displaying an understanding of the financial aspects and showing readiness to comply with any necessary procedures.
• The letter concludes with expressions of gratitude for the support and coverage provided by XYZ Insurance Company, adding a courteous and appreciative note to the closure.

Car Insurance Cancellation Letter Sample

Insights

Eric Ricks effectively communicates his request for policy cancellation, offering all necessary details in a respectful manner. The use of a clear subject line, detailed information, and a professional tone enhances the overall effectiveness of the letter.

The sample letter is ideal for a wide range of individuals needing to cancel their car insurance. It’s particularly useful for those who have experienced significant changes like selling their vehicle or switching insurers. Its clear, professional format makes it suitable for both young adults handling their first insurance cancellation and experienced drivers. 

Key components

• The subject, “Request for Cancellation of Car Insurance Policy No. ABC123456,” is concise and to the point, ensuring that the recipient at Best Insurance Co., in this case, immediately understands the purpose of Eric Ricks’ letter.
• Addressing the insurance company as “Best Insurance Co.,” Eric maintains a respectful and formal tone throughout the letter, establishing a professional and courteous communication.
• Eric initiates the letter by clearly stating his intention: formally requesting the cancellation of his car insurance policy, providing the specific policy number for easy identification.
• The letter provides a specific effective date for cancellation (February 1, 20XX) and cites the sale of the vehicle as the reason, offering a straightforward and valid explanation for the request.
• Including detailed information about the insured vehicle, such as the make, model (2020 Toyota Camry), and registration number (XYZ1234), adds precision and helps Best Insurance Co. accurately locate the policy.
• Eric explicitly asks for a written confirmation of the cancellation and any applicable refund, demonstrating a clear understanding of the process and the relevant policy terms.
• By providing both his mailing address and email, Eric ensures that Best Insurance Co. can respond using the preferred method. Additionally, he expresses readiness to provide any additional information if needed, streamlining the communication process.
• Concluding the letter with appreciation for the assistance and services received during the policy’s tenure adds a courteous and professional touch to the closure.
• In summary, Eric Ricks effectively communicates his request for policy cancellation, offering all necessary details in a respectful manner. The use of a clear subject line, detailed information, and a professional tone enhances the overall effectiveness of the letter.

Health Insurance Cancellation Letter

Insights

Stephanie Murphy effectively communicates her request for health insurance policy cancellation, combining clear information, a respectful tone, and proactive measures. The letter is well-structured and considerate, enhancing its overall effectiveness.

This letter is a good example for individual policyholders who need to cancel their health insurance policy, often due to significant life changes like obtaining new insurance or changing employment. It serves to convey the policyholder’s intent to the insurance company, ensuring efficient processing and a smooth transition during the cancellation process.

Key components

• The subject, “Request for Cancellation of Health Insurance Policy HLTH789123,” is direct and informative, allowing the recipient at BestLife Health Insurance Co. to understand the purpose of Stephanie Murphy’s letter right away.
• Stephanie maintains a professional and respectful tone throughout the letter, addressing BestLife Health Insurance Co. and expressing gratitude for the coverage and support provided.
• In the opening paragraph of her letter, Stephanie makes it apparent that she is formally asking for her health insurance policy to be canceled. She even includes her policy number for verification.
• The letter provides a specific effective date for cancellation (February 1, 20XX) and states the reason for cancellation, citing eligibility for a health insurance plan through a new employer (ABC Corporation).
• Stephanie provides both her email address and mailing address for written confirmation, demonstrating readiness to facilitate communication through multiple channels.
• Inquiring about the potential for a refund for pre-paid premiums, Stephanie shows that she is aware of the possible financial ramifications. Additionally, she proactively returns her insurance card, following policy guidelines.
• Stephanie expresses willingness to fulfill any necessary requirements for the cancellation process, indicating cooperation and readiness to comply with the company’s procedures.
• Stephanie concludes the letter by expressing appreciation for the coverage and support provided during her policy period, adding a courteous and thankful touch to the closure.
• In summary, Stephanie Murphy effectively communicates her request for health insurance policy cancellation, combining clear information, a respectful tone, and proactive measures. The letter is well-structured and considerate, enhancing its overall effectiveness.

Key Points To Consider

Canceling an insurance policy involves many legal aspects that you should cover to avoid any lawsuits in the future.

Following are the key points of the insurance cancellation letter that you need to consider:

Date of cancellation of the insurance

The first thing that you should keep in mind while drafting an insurance letter is to mention the date when you want to cancel the insurance so that you do not have to pay extra.

Refund for unused premiums

If premiums are paid and not collected, which is called the return of premiums, an account number will be indicated to deposit them and the account holder’s name. You must remember to request these unused premiums in case any of them have not been provided to you.

Statement of prohibition for the insurer

It would be best if, while drafting a cancellation letter, you made a clear statement prohibiting an insurer from withdrawing funds.

Written confirmation of cancellation

The last thing you need to consider is requesting that the insurer provide written confirmation that the policy will be cancelled by the due date.

Why Stay Insured During Crises

To make sure that your interests are safeguarded, even during a crisis, here are a few reasons why you should keep an insurance plan as your crisis management strategy:

Worker compensation: If an illness epidemic occurs, such as the flu, your employers may turn to you to cover their salaries as well as any medical expenses that may arise. For all kinds of injuries, having insurance in place during a disaster is a must.
General liability claims: Since lawsuits do not generally have a time limit, you must keep your liability coverage in order during a crisis. People will always get injured on your property, and if you continue to do business online, you’ll need this valuable insurance policy in the event of any claims.
Director insurance claims: Whether you have a board of directors or not, they can most likely continue to function during a crisis or natural disaster. That ensures you will also need to supply directors and officers with liability protection to protect their personal belongings.
Employment practice liability claim: They will most likely continue to run during a war or natural disaster, and they can operate remotely, regardless of whether you have board members. As a result, you’ll need to provide directors and officers with liability insurance to cover their personal property.

How to Save Money without Insurance Cancellation

If you need more disposable income and want to save money on premiums without canceling the insurance policy, it is possible by following many different tips:

Lower your coverage: Though it is not always recommended, you can lower your coverage to save more on insurance.
Increase deductibles: One more way to save money without canceling the insurance policy is by increasing the deductibles, which will lower the cost without changing the general level of coverage.
Reduce payrolls on worker’s compensation: Another method to save money without cancelling your insurance policy is to reduce the workers’ work hours, which will lower their compensation. You can increase the amount later.
Make sure insurance coverage stays active: The last tip for saving money without cancelling an insurance policy is to ensure that you have an alternate coverage policy to safeguard yourself if there is a lawsuit.

Frequently Asked Questions