You are allowed to cancel your policy anytime during the policy period provided there is no settled or outstanding claim in the policy. All you need to do is to send a written request to the insurer for cancellation along with the reason for cancellation.
The insurer accepts the following reasons for policy cancellation –
- Sale of assets
- Moving out
- Business closure
- Any other reason as stated by the insured
Upon receipt to cancel your policy request, the insurer checks for paid or outstanding claims under the policy. In case there are no paid or outstanding claims, the insurer cancels the policy and issues a refund to the policyholder. The refund premium in case of mid-term policy cancellation is calculated on the short period scale as listed below –
| For a period not exceeding 15 days | 10% of the annual rate |
| For a period not exceeding 1 month | 15% of the annual rate |
| For a period not exceeding 2 months | 30% of the annual rate |
| For a period not exceeding 3 months | 40% of the annual rate |
| For a period not exceeding 4 months | 50% of the annual rate |
| For a period not exceeding 5 months | 60% of the annual rate |
| For a period not exceeding 6 months | 70% of the annual rate |
| For a period not exceeding 7 months | 75% of the annual rate |
| For a period not exceeding 8 months | 80 % of the annual rate |
| For a period not exceeding 9 months | 85% of the annual rate |
| For a period exceeding 9 months | The full annual rate |
For example, if the request for cancellation is made by the insured after running the policy for 6 months, 70% premium will be retained by the insurer and the refund amount will be only 30% of the total premium paid upon policy cancellation.
