Refund and Cancellation Policy

California Policy Cancellation and Nonrenewal Rules Explained

This policy outlines how and when a California insurer may cancel or choose not to renew coverage, with strict notice requirements designed to protect the insured. If a policy has been in effect for 60 days or less, the insurer may cancel for any reason with at least 10 days’ notice. After 60 days (or for renewals), cancellation is allowed only for specific reasons such as nonpayment, fraud, material misrepresentation, legal violations that increase risk, or significant changes in risk exposure. Notice periods range from 10 to 30 days depending on the reason. For nonrenewal, insurers generally must provide 60–120 days’ advance notice, subject to limited exceptions. All notices must be sent by certified mail, with additional mailing days added based on the recipient’s location.

By Gary Swiftbonds, nationally recognized expert in surety bonds, bid bonds, and performance bonds.

CANCELLATION/NONRENEWAL – CALIFORNIA FULL CANCELLATION – INSURER

It is agreed that:

The policy provisions regarding cancellation by the Company are deleted and replaced with the following:

CANCELLATION OF POLICIES IN EFFECT FOR 60 DAYS OR LESS

If this Policy has been in effect for 60 days or less and is not a renewal of a policy we issued, we may cancel this Policy for any reason by mailing to the entity named in Item 1 of the Declarations with a copy to the agent or broker of record written notice of cancellation at least 10 days before the effective date of cancellation.

CANCELLATION OF POLICIES IN EFFECT FOR MORE THAN 60 DAYS

If this Policy has been in effect for more than 60 days, or is a renewal of a Policy we issued, we may cancel only for one or more of the following reasons:

(a) Nonpayment of premium;

(b) Administrative tribunal or court judgment that insured has violated state law which materially increases risk(s) insured;

(c) Fraud or material misrepresentation by the named insured;

(d) Willful or grossly negligent acts or omissions or violation of state safety standards which materially increase the risk(s) insured;

(e) Failure to implement agreed upon loss control measures;

(f) Determination by commissioner that:

loss of or change(s) in reinsurance covering risk would threaten insurer’s solvency; or

continuation of policy would place insurer in violation of law or threaten insurer’s solvency;

(g) Change in insured’s activities or property of the commercial or industrial enterprise which materially increases risk(s);

(h) In addition to the above reasons, umbrella and excess policies may also be canceled for any of the following reasons:

material change in limits, type or scope of coverage, or exclusions in one or more of the underlying policies;

cancellation or nonrenewal of one or more of the underlying policies where such policies are not replaced without lapse; or

a reduction in financial rating or grade of one or more insurers, insuring one or more underlying policies based on an evaluation obtained from a recognized financial rating organization.

We will mail written notice of cancellation under this item, to the entity named in Item 1 of the Declarations with a copy to the agent or broker of record at least:

(1) 10 days before the effective date of cancellation if we cancel for nonpayment of premium or fraud; or

(2) 30 days before the effective date of cancellation if we cancel for any other reason described in (b) through (h) above.

The following is added and supersedes any other provision to the contrary:

NONRENEWAL

If we decide not to renew this Policy, we will mail written notice of nonrenewal to the entity named in Item 1 of the Declarations with a copy to the agent or broker of record at least 60 days but not more than 120 days before its expiration date, or its anniversary date if it is a Policy written for a term of more than one year or with no fixed expiration date.

Nonrenewal notice is not required if:

1.  transfer or renewal of a policy without changes between insurers of the same group;
2.  extensions of 90 days or less;
3.  the insured has obtained or agreed to obtain replacement coverage within 60 days of termination;
4.  for 60 day policies where notice of renewal is given at the time the policy was issued;
5.  the insured requests a change in terms, conditions or risk covered by the policy within 60 days prior to the end ofthe policy period; or
6.  the insured has made a written offer 60 days prior to the end of the policy term to renew under different

Any notice of cancellation or nonrenewal will be sent by certified mail to the entity named in Item 1 of the Declarations with a copy to the agent or broker of record at the last mailing address known to us.

Mailing time must be added to the notice period as follows:

add 5 days when mailing to an addressee in California;

add 10 days for an addressee outside of California; or

add 20 days for an addressee outside the United States.

Nothing herein contained shall be held to vary, alter, waive or extend any of the terms, conditions, exclusions or limitations of the above mentioned policy, except as expressly stated herein. This endorsement is effective at the inception date stated in the Declarations and this endorsement is part of such policy and incorporated therein.

CANCELLATION/NONRENEWAL – CALIFORNIA CANCELLATION FOR NONPAYMENT OF PREMIUM

 

It is agreed that:

1. The policy provisions regarding cancellation by the Company are deleted and replaced with the following:

We may cancel this Policy for nonpayment of premium by mailing to the entity named in Item 1 of the Declarations with a copy to the agent or broker of record written notice of cancellation at least 10 days before the effective date of cancellation.

2. The following is added and supersedes any other provision to the contrary:

NONRENEWAL

A) If we decide not to renew this Policy, we will mail written notice of nonrenewal to the entity named in Item 1 of the Declarations with a copy to the agent or broker of record at least 60 days but not more than 120 days before its expiration date, or its anniversary date if it is a Policy written for a term of more than one year or with no fixed expiration date.

 

B) Nonrenewal notice is not required if:

1.  transfer or renewal of a policy without changes between insurers of the same group;
2.  extensions of 90 days or less;
3.  the insured has obtained or agreed to obtain replacement coverage within 60 days of termination;
4.  for 60 day policies where notice of renewal is given at the time the policy was issued;
5.  the insured requests a change in terms, conditions or risk covered by the policy within 60 days prior to the end of the policy period; or
6.  the insured has made a written offer 60 days prior to the end of the policy term to renew under different
7. Any notice of cancellation or nonrenewal will be sent by certified mail to the entity named in Item 1 of the Declarations with a copy to the agent or broker of record at the last mailing address known to us.

Mailing time must be added to the notice period as follows:

a) add 5 days when mailing to an addressee in California;

b) add 10 days for an addressee outside of California; or

c) add 20 days for an addressee outside the United

Nothing herein contained shall be held to vary, alter, waive or extend any of the terms, conditions, exclusions or limitations of the above mentioned policy, except as expressly stated herein. This endorsement is effective at the inception date stated in the Declarations and this endorsement is part of such policy and incorporated therein.

Frequently Asked Questions

Can an insurer cancel a California policy for any reason in the first 60 days?

Yes. If the policy has been in effect for 60 days or less and is not a renewal, the insurer may cancel for any reason, provided it mails written notice at least 10 days before the effective cancellation date.

What reasons allow cancellation after the policy has been in force more than 60 days?

After 60 days (or for renewal policies), cancellation is limited to specific grounds such as nonpayment of premium, fraud or material misrepresentation, certain court or administrative judgments, willful or grossly negligent acts that increase risk, failure to implement agreed loss controls, or material changes that increase insured risk.

How much notice is required for cancellation in California?

The notice period depends on the reason. The insurer must provide at least 10 days’ notice for nonpayment of premium or fraud, and at least 30 days’ notice for other permitted cancellation reasons.

When must an insurer send a nonrenewal notice?

If the insurer chooses not to renew, it must mail a written nonrenewal notice at least 60 days but no more than 120 days before the policy’s expiration or anniversary date, unless a listed exception applies.

How are cancellation or nonrenewal notices delivered and timed?

Notices must be sent by certified mail to the named insured and the agent or broker of record. Additional mailing time is added to the notice period—5 days within California, 10 days outside California, and 20 days outside the United States.