The cancellation of insurance policies is a common occurrence. Every day insurance agencies receive requests from insureds to cancel coverage and insureds receive notices from insurance companies that their coverage is about to be canceled. If there is a battle over the cancellation, all parties will look to the same section of the policy to justify their argument. If the insurance company requests the cancellation, the return premium is calculated on a pro rata basis. If the first named insured requests the cancellation, the insurance company has the right to return "less than pro rata." It is always best to calculate the return premium using both of the methods.
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