What is flat cancellation in insurance?

Flat cancellation in insurance refers to a situation where a policy is canceled either by the insurance company or by the insured effective on the date of the cancellation. This means that the coverage ceases immediately, and there is no period of coverage beyond that date. Unlike other forms of cancellation, which may involve a prorated refund or a notice period, flat cancellation does not require the policy to remain in force for any additional time.

This type of cancellation is straightforward and is often used for various reasons, such as if the insured decides they no longer need the coverage at the outset or if the insurer identifies an issue with the policy that warrants immediate cancellation. It serves to simplify the cancellation process by avoiding complex calculations regarding any portion of the premium that might be owed or refunded.