Section 9.18 Cancellation and Refusal to Renew

• Library: Insurance Practice 2015

The coverage of insureds may be terminated by the insurer in two primary ways. First, the insurer may cancel the policy before its scheduled termination date upon giving the notice required in the policy. Wrongful cancellation is a breach of the insurance contract by the insurer, 2 William E. Knepper & Dan A. Bailey, Liability of Corporate Officers and Directors §§ 23.08, 23.09 (7^th ed. 2003), but no action will lie for wrongful cancellation if the insured directors and officers suffer no actual injury as a result. Berg v. First State Ins. Co., 915 F.2d 460, 465 (9^th Cir. 1990). Additionally, a few cases have indicated that a cancellation of the policy in an attempt to cut off the precise coverage that was bargained for may subject an insurer to bad faith liability, even if the cancellation is technically within the insurer’s rights under the policy. Helfand v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa...