Texas General Lines — Property and CasualtyTexas Laws and RegulationsMedium
An insurance company wishes to cancel a commercial property policy that has been in effect for 75 days due to a significant increase in the policyholder's risk profile not present at the time of underwriting. What is the minimum number of days' notice the insurer must provide before the cancellation takes effect in Texas?
- A10 days
- B15 days
- C60 days
- D30 days
Show answer & explanationAnswer & explanation
Correct answer: A. 10 days
For commercial property policies in Texas, if the policy has been in effect for more than 60 days but less than 90 days, or if the cancellation is due to a material increase in risk not contemplated at underwriting, generally 10 days' notice is required for cancellation.
Why the other options are wrong
- B. 15 days is often associated with non-renewal notices for personal auto policies, not cancellation in this specific scenario.
- C. 60 days is generally for non-renewal notices on certain long-term policies, not for cancellation due to increased risk after 75 days.
- D. 30 days is typically required for non-renewal notices or cancellations for non-payment of premium in certain commercial policies, or for most cancellations after 90 days.
Commercial Property Cancellation Notice
The minimum period an insurer must notify a policyholder before canceling a commercial property policy in Texas, which varies based on policy duration and reason for cancellation.
- Less than 60 days: 10 days notice (for specific reasons like non-payment or material misrepresentation).
- More than 60 days: 10 days notice for increased hazard; 30 days notice for other reasons.
- Non-renewal typically requires 60 days notice.
Memory trick: Notice periods protect, giving time to select.