Flat Rate Cancellation
Flat rate cancellation is a term used to describe a type of car insurance termination. When a policy is canceled in this way, the insurance provider never assumes liability because the agreement is never put into effect. Rather, it is terminated before the policy’s inception.
Flat rate cancellation is often initiated on the policyholder’s side of an agreement. If a policyholder decides, after making an agreement with an insurance provider, that he does not wish to pursue that policy, the policyholder can cancel the agreement before it goes into effect. A policyholder wishing to cancel the agreement before the policy is put in effect often needs to do so before a specific date, prior to the policy going into effect. Cancellations of this type are usually associated with a fee; this fee may increase as the date of the policy’s commencement is approached.
Having a flat rate cancellation option available in a policy agreement can be beneficial to someone looking for car insurance because it means that, while an agreement was reached, the policyholder can leave if so desired. The reasons for using this type of cancellation are often monetary in nature. Even with the fee for flat rate cancellation, it may save money to use this cancellation and pay the fee and switch to a policy that is cheaper, thereby costing less money in the long run and even paying back the money lost to the fee. Another use of this cancellation might be if the person seeking coverage is suddenly without a car, or in a position in which a car may not be needed. If they are moving to a city for example, they can use this type of cancellation and be free of that commitment.
Flat rate cancellations may also occur as the result of something the policyholder didn’t do. If the policy calls for some type of down payment or initial payment, and that payment to the insurance company is not completed, if the check doesn’t clear for example, the insurance provider may initiate the cancellation prior to taking on the liability.
If the policyholder wishes to invoke a cancellation of this type they need to be aware first if their policy allows such a cancellation and what, if any, fees may apply. Additionally, one must be sure as to whether or not there is a deadline to cancel. Canceling a policy is often as easy as contacting the providers and informing them of the desire to cancel a policy. This is often best done in writing with the name of the insured, policy number and date that the policy should be canceled.