You can decide to cancel your tornado insurance at any time and for any reason. However, note that your insurer might impose a penalty for cancellation or charge a cancellation fee. Before you cancel, make sure you contact a knowledgeable and well-licensed Texas property insurance agent. These agents can help you:
Assess your insurance needs
Explain how the cancellation will affect you
Suggest other options to ensure that there is no gap in your tornado insurance coverage.
Like any property insurance coverage, if you no longer own the insured property or don’t need to maintain tornado coverage, you can easily cancel it. The easiest way to cancel your tornado insurance coverage is by talking with your insurer directly or asking your insurance agent to handle the process for you. The process of cancellation involves:
Last-chance evaluation of your needs, to check if the coverage is indeed no longer needed or just needs to be replaced with something else - more fitting.
Informing the insurer of the need to cancel,
Answering a questionnaire, telling the insurer why you are leaving - to help them understand consumer’s needs,
Signing any possible cancellation paperwork, and
Receiving the refund of paid in premium, if the insurance was paid forward and not all of the term of coverage has been exhausted. Most commercial property coverage is paid in an annual lump-sum, so the unused portion is refunded back to the company that paid the bill.
Before canceling, check the terms and conditions of your existing policy and pay attention to details regarding early termination.
If you need to maintain tornado coverage after cancellation of the existing policy, make sure that you already have another policy approved, paid and in place. This will ensure that you are not left without protection for any period of time. Research other insurance companies, taking into consideration your coverage needs and other things like pricing and coverage limits, and decide the coverage you need. You can cancel your tornado insurance by contacting your insurance provider and letting them know about your decision to cancel.
You should cancel your tornado insurance if:
You find better tornado insurance, where the coverage, the cost, and the insurer’s reputation create a better deal for you needs, or
You no longer need tornado insurance. If you sell the property, make sure that the cancellation of coverage coincides with the transfer of ownership.
You are not satisfied with the services provided by the insurer. Make sure to let the insurer know the reason why.
Bear in mind that tornadoes can happen in any area, especially during the storm seasons, so make sure you have a new policy before you cancel your current tornado insurance.
Canceling your tornado insurance policy without any backup is bad because you might be faced with extensive repair or replacement costs that you will have to deal with on your own if tornado damage occurs when you do not have tornado insurance. Not having any tornado insurance means you will be responsible for any repairs or reconstruction that need to be done if a tornado hits and damages your property. Tornado insurance also provides coverage for additional expenses that may be incurred in finding alternative accommodation after a storm. Without tornado insurance, you will be without this protection as well. For example, if you do not have tornado insurance and a storm damages your home, necessitating that you go and live in a hotel for several weeks, you will have to pay for your accommodation and bear the costs of repairs out of your own pocket.
Yes. You may be able to cancel your tornado insurance without a penalty, although this is determined by your insurance provider and the terms and conditions of your insurance policy. Some insurance companies might impose a penalty if your insurance is canceled within the first six weeks of purchase or otherwise. It is important that you go through the terms and conditions of your insurance policy before you decide to cancel your insurance. Speak with your agent who helped you pick the policy and ask them for advice on how to cancel without paying the penalty.
Yes, you get a refund on any unused premiums after canceling your tornado insurance in Texas. Like with any insurance, if you have paid more in premiums than you have used during the policy term - you are entitled to a refund.
For residential policies, when you can cancel them mid-term, the refund of a prorated unused premium is sent back to the insured, even if the coverage was paid using an escrow. If the policy was refunded as a part of a switch to a new insurer, make sure to send the received refund back to escrow, so it can be used for the new coverage.
For commercial policies, the refund of unused premium depends on the mode of original prepayment:
If the insured business paid for the annual term in full, the prorated refund is sent usually as a paper check, written out to the name of the business.
If the insured business used a premium financing loan to pay for coverage, the insurer sends the prorated amount of coverage either to the:
Business - which then settles the loan with the bank on its own terms, or
Financing organization directly, which deducts all its due fees and then sends the business the remaining balance. When premium financing is used, the refund is usually very minimal.
To reinstate your tornado insurance after cancellation, you will need to contact your insurance company and seek reinstatement. You will typically be required to make any outstanding payments. You may also be subject to fines for late payment. Your insurance company might decide to reinstate your insurance or open a new account for you with similar terms as the previous insurance policy. Consult with a Texas-licensed property insurance for professional advice and more details.