This month, we are going to talk about something that most folks try to avoid talking about – insurance cancellation notices, specifically for non-payment of premium. One of our readers suggested this topic as she has come across it many times and feels it is something that managers need to better understand. Notices of cancellation (NOC) automatically come from insurance carriers when a payment has not been received by the due date. Angela Barry from Associa Northern California pointed out four major things that she feels managers do not fully understand:

1. When an NOC is issued, the past due payment must be received by the insurance carrier before the NOC date – not in the mail or the date stamped on the envelope.

2. The policy will cancel at 11:59:59 pm the day before the date on the NOC if the minimum payment amount due is not received. Example: If the NOC date is 7/24/23 and a payment has not been received by the carrier on 7/23/22 before 11:59:59 pm, the policy will cancel on 7/24/23 at 12:00 am.

3. If the account is on monthly payments, a NOC will be generated when the payment has not been received. Usually, the cancellation letter will include the past due amount as well as the current due amount for a “total amount due.” If only the past due amount is paid, the account will stay past due, and NOC letters will keep being generated because the account is a month behind in payments. Once the past due payment and the current payment have been paid making the account current, regular monthly invoices will be generated again.

4. Depending on when the past due payment is received, the carrier should rescind the notice of cancellation. If the past due payment is not made, or is made too late, the policy will lapse and the association will be without coverage. Lapses in coverage are a huge issue which will affect the ability of the association to get insurance coverage in the future. Many carriers will refuse to provide coverage for an association that has experienced a lapse, and the carriers that will (excess and surplus lines carriers) have much higher rates.

If you have questions about NOC letters, lapses in coverage, or anything else regarding insurance for common interest developments, reach out! And if you have an idea for a Coverage Corner, you can get a gift card just like Angela did for this month!

Terri Guest, CIRMS, CMCA, EBP, is the Northern California Senior Sales & Marketing Representative for Berg Insurance Agency and can be reached at Terri@berginsurance.com.

Angela Barry, formally a Licensed CA Insurance Agent, currently working for Associa Northern California has been dedicated in making sure that clients insurance policies do not cancel or have a lapse in coverage by working with insurance Agents, Brokers, carriers, and Community Managers. Due to the increase of carriers pulling out of California because of the number of perils over the years; it has made it difficult to ensure customers have coverage at an affordable cost. Angela is dedicated to taking the time to teach Community Managers the importance of insurance payments and the process to ensure there are no lapses in coverage for their clients.