Will I Get a Refund after Submitting an ACORD Cancellation Form?

Will I Get a Refund after Submitting an ACORD Cancellation Form

Insurance policies play a crucial role in protecting and reducing asset financial loss. However, policies can be canceled for various reasons. If you are canceling a policy and are wondering, “Will I get a refund after submitting an Acord Cancellation form?” The refund policy depends on multiple factors, and they provide refunds according to their terms and conditions. The following factors and criteria will help you understand the refund process.

Why Choose the Acord Cancellation Form?

The Acord cancellation form, or the Acord 35 form, is a legal document to cancel an active insurance policy. The policyholder can use this form for various insurance types, including auto, homeowners, general liability, worker’s compensation, and business insurance. After this form is filled out and submitted, the insurance provider determines the process to calculate eligibility for a refund.

Factors Affecting Refund Eligibility

Policy Type

Some policies, including auto and home insurance, provide prorated refund criteria to policyholders. If they cancel the policy before the policy ends, they will get a refund for the remaining period. According to their terms and conditions, the commercial insurance policy is non-refundable. The event and travel policy also does not provide refunds.

Policy Terms and Conditions

The insurance providers have different refund policies. They usually charge the refund fees or administrative charges mentioned on the insurance policy. You need to read the terms and conditions before applying for the cancellation of a policy.

Cancellation Timing

The policyholder must ensure the cancellation timing, as it impacts the refunds of the insurance policy.

  • You will receive a full refund for your policy if you cancel it before the coverage starts.
  • If you cancel the policy during the middle of the policy, you will receive refunds for the remaining period.
  • If you apply for the cancellation of your policy near the expiry period, you are eligible for the refund policy.

How Refunds are Calculated after Submitting an Acord 35 Form

Insurance providers usually use two methods for calculating refunds after policy cancellation.

Prorated Refund

In this calculation, the policyholder will receive refunds for the remaining policy period. If you prepaid for a 12-month policy but cancel it after 4 months, you may receive refunds for the remaining 8 months. For example,

  • Annual premium: $2400
  • Monthly Cost: $200 ($2400/12 months)
  • Canceled after 4 months
  • Refund: $1600 (remaining 8 months)

Short-Rate Refund

Some insurance providers charge a penalty percentage for the early cancellation of a policy. However, if the policyholder cancels the policy during the early period, the provider will charge the rate for the remaining period. For example,

  • Annual premium: $2400
  • Cancellation after 4 months
  • Short-rate penalty: 10%
  • Refund: $1440 (Instead of $1600 due to penalty)