The contract requires 30 days’ notice of cancellation to the owner. What can the agency do?

Check the policy for an endorsement that promises notice to that party. If there is none, ask the insurer for one. The certificate cannot create the obligation: the ACORD 25 says notice will be delivered in accordance with the policy provisions.

Can we cross out the cancellation wording on the ACORD 25 and type our own?

No. The form’s wording refers to the policy, and states with certificate laws prohibit altering it. Georgia’s insurance department says certificate forms cannot be altered, and Texas law says a certificate may not alter the terms of the notice the policy requires.

Does an additional insured automatically get notice of cancellation?

Not under the standard condition. ISO form IL 00 17 11 98 promises notice only to the first Named Insured. An additional insured gets notice only if an endorsement or a state law provides for it.

Why can’t the certificate promise 30 days’ notice of cancellation to the certificate holder?

Q: Why can’t the certificate promise 30 days’ notice of cancellation to the certificate holder?

Because the certificate does not create the obligation. Since ACORD’s 2009 revision, the ACORD 25 says only that notice of cancellation “will be delivered in accordance with the policy provisions”, and the standard cancellation condition promises notice to the first named insured alone. A certificate holder is entitled to notice only if an endorsement on the policy names it, or a state law requires it.

What did the ACORD 25 say before 2009, and what changed?

Older editions had a blank for a number of days. The clause read: “the issuing insurer will endeavor to mail ____ days written notice to the certificate holder named to the left, but failure to do so shall impose no obligation or liability of any kind upon the insurer, its agents or representatives.” Producers often typed 30 in the blank to match a contract.

A white paper from the Graham Company records that ACORD’s certificate forms working group reviewed the forms in the summer of 2009 and that new versions were published in October 2009. The cancellation box now reads: “Should any of the above described policies be cancelled before the expiration date thereof, notice will be delivered in accordance with the policy provisions.”

The same paper quotes ACORD’s reason: “Only a policy can obligate an insurer to provide notice of cancellation.” It adds that from October 1, 2010 ACORD’s license terms required producers to use only the new version. The current edition has the same sentence and no blank.

What does the policy’s cancellation condition say?

Under ISO Common Policy Conditions IL 00 17 11 98	What it says
Who the insurer notifies	The first Named Insured, at the last mailing address known to the insurer
Notice for nonpayment of premium	At least 10 days before the effective date of cancellation
Notice for any other reason	At least 30 days before the effective date
Proof	If notice is mailed, proof of mailing is sufficient proof of notice
Certificate holders and additional insureds	Not mentioned
Who may cancel on the insured’s side	The first Named Insured, by advance written notice to the insurer

Do state laws give the holder notice?

State law often changes the day-counts, but usually for the named insured. Florida requires at least 45 days’ written notice of cancellation to the first-named insured on most property and casualty policies, and 10 days for nonpayment. New York’s commercial lines law requires notice to the first-named insured and to that insured’s authorized agent or broker. Neither gives a certificate holder a place in the line.

Texas says so in terms. Under Insurance Code § 1811.155 a person has a legal right to notice of cancellation, nonrenewal or material change only if the person is named in the policy or an endorsement, and the policy, the endorsement or a law requires the notice. The same section says a certificate “may not alter the terms and conditions of the notice required by a policy”. The Texas Department of Insurance adds that a certificate may show a notice provision as long as it mirrors the policy.

Other states have their own rules. Check the state before answering.

What does extend notice to a third party?

An endorsement on the policy. There is no single standard form for liability policies. The Graham Company paper notes that after the 2009 change some insurers developed endorsements for the purpose, and others looked to the producer to send the notice. Wording varies and needs reading. One CNA specimen endorsement for Tennessee, form CNA101501TN, says only that the insurer “will endeavor to mail notice to the person or entity named below”, with no number of days.

For property, Malecki’s 2007 Rough Notes article says mortgage holders and lender’s loss payees shown on ISO endorsement CP 12 18 are promised notice of cancellation or nonrenewal if they meet its conditions. In New York construction, item F of the ACORD 855 NY asks directly whether the additional insured will receive advance notice if the insurer cancels.

Look for a notice endorsement on the policy that names or reaches this party.
If it is there, cite it by title, form number and edition date and offer a copy.
If it is not, ask the insurer whether it will issue one, and tell the client the contract term is not yet met.
Do not type a day-count into the description of operations box.

Sources

General information, not legal advice or an interpretation of your policy. Policy forms and endorsements control. Form numbers are © Insurance Services Office, Inc. and are cited for reference.