Home Insurance Cancellation Penalty?
by Jane C.
(Kitchener, ON, Canada)
My five-plex in an older home had been insured by Company A for 16 years, during which I never made a claim. After I was encouraged to upgrade to replacement cost, a home inspection was ordered, with the resulting demand to contract for total removal of all knob and tube and galvanized plumbing in the building within 45 days. After finding out that neither the Electrical Safety Authority nor the Insurance Brokers Association of Canada support the demand for removal of knob and tube in the walls, I asked my broker to approach the company about reconsidering their demand. After two weeks of not hearing back from either, I found a that Company B would insure the property provided the electrical was brought up to ESA standards. I agreed to this, had the work done immediately. I took a policy with Company B, and sent a signed Cancellation of Insurance to my broker for Company A, with a request for reimbursement of the unused portion of my premium (103 days). Company A has now sent a cheque for an amount somewhat over $100.00 short of my own calculation, which was basically premium, divided by 365, and multiplied by 103. Company A's statement does not specify a cancellation penalty, but I'm thinking a penalty must be built in to the statement. Would this be usual? If so, would this be fair, or even legal considering I was pretty pressured into cancelling? Can you give me advice on how should I frame my question to Company A about this issue?
Home Insurance Cancellation Penalty
Sorry for the delay. What Company A likely did was issue a refund using a "short rate" cancellation instead of a pro rated cancellation. This is a common practice when home insurance is cancelled early.
I understand your frustration because it seems they would have cancelled your coverage due to the knob and tube.
Hope that helps a little.
Please be sure to discuss this with a licensed insurance representative. And you can try getting quotes here:
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