Summary: The Common Policy Conditions form, IL 00 17 11 98, of the ISO simplified-language commercial property program contains six conditions that must be incorporated into any policy written under the program and that apply to all the policy’s coverages. Most of these common policy conditions are restatements, modified in varying degrees, of provisions of the standard fire policy.

Topics covered:

Cancellation

Changes

Examination of your books and records

Inspections and surveys

Premiums

Transfer of your rights and duties under this policy

Cancellation

1.The first Named Insured shown in the Declarations may cancel this policy by mailing or delivering to us advance written notice of cancellation.

2.We may cancel this policy by mailing or delivering to the first Named Insured written notice of cancellation at least:

a.10 days before the effective date of cancellation if we cancel for nonpayment of premium; or

b.30 days before the effective date of cancellation if we cancel for any other reason.

3.We will mail or deliver our notice to the first Named Insured’s last mailing address known to us.

4.Notice of cancellation will state the effective date of cancellation.  The policy period will end on that date.

5.If this policy is cancelled, we will send the first Named Insured any premium refund due. If we cancel, the refund will be pro rata. If the first Named Insured cancels, the refund may be less than pro rata. The cancellation will be effective even if we have not made or offered a refund.

6.If notice is mailed, proof of mailing will be sufficient proof of notice.

Analysis

Either the insurer or the insured may cancel the policy by giving the other advance written notice. The notice may be mailed or delivered directly to the other party. If the insurer mails notice, proof of mailing is proof of notice. If the insurer cancels, it must give at least ten days notice when the cause is nonpayment of premium and thirty days for cancellation on any other grounds.

The insured receives a pro rata premium refund when the policy is cancelled by the insurer. For cancellation by the insured, the cancellation condition provides merely that any premium refund “may be less than pro rata.” This language allows the insurer to use a short rate table to set the amount of premium refund on a policy cancelled by the insured. Many insurers cancel at pro rata less 10 percent for a cancellation requested by the insured. Cancellation is effective even if the insurer has not made or offered a refund.

Dealings between insurer and insured with respect to cancellation (and certain other matters—see following) are to be carried out by “the first Named Insured shown in the Declarations” when more than one insured is named in the policy. It is the first named insured who must mail or deliver notice of cancellation to the insurer and to whom the insurer mails or delivers the cancellation notice (at the last mailing address known to the insurer). Premium refund is also made to the first named insured.

Changes