Cancellation of a homeowners’ insurance policy requires compliance with terms and conditions of the policy. It may sound simple, but we have seen several full blown lawsuits arise over the years where the manner in which the policy was cancelled before a loss occurred was challenged. The starting point is a review of the requirement and the procedure for cancellation inside the insurance policy as well as a review of the Oklahoma statutes. The statutory fire policy provides five days’ written notice of cancellation with or without tender of the excess premium pro rated for the remaining time not used. The notice of cancellation is required to state that the excess premium (if not tendered) will be refunded on demand.

Some insurance policies provide for a greater notice period than the statutory five days. An insurance company should comply with its own policy terms and conditions for cancellation and provide the additional time per the policy. Some policies prescribe notice of cancellation by registered mail which is not the same as certified mail. In these cases, the insurer should use the procedure for registered mail.

We saw an interesting blog not long ago by Jason W. Anderson commenting on a Washington Supreme Court decision.  The insurer attempted to cancel a policy by using certified mail as opposed to regular mail. The State of Washington has a statutory requirement for notice of cancellation and the question was whether certified mail was the equivalent of mailing under the statute.

The court decided certified mail was not the equivalent of regular mail and the policy was never actually cancelled. The court found there were some practical differences between regular mail and certified mail in that there is a greater imposition placed upon the insured as it requires the policy holder to be at home to receive the letter or actually travel to the post office to retrieve it. A cancellation notice sent by regular mail would arrive without the hassle and aggravation of signing for the certified envelope or going to the post office to pick it up.

In summary, when there is an issue of cancellation involved, the insurer should follow the applicable regulations as well as the insurance policy guidelines. When the applicable regulation and the policy provide different notice requirements, then the insurer should follow the insurance policy (provided it doesn’t attempt to give less notice than the statute).  If in doubt, consult with an attorney who practices in areas of insurance coverage.