An agent’s insured is selling her home. She received a contract for closing in 45 days and wants her agent to cancel the policy back to the date of the contract.

Q: "We have explained forced place coverage from the lender and that it’s in her best interest to keep coverage on the home until the closing has taken place. But she insists on cancelling back to the date of the closing contract issuance. As her agent, do I have an obligation to cancel her policy? Will the carrier even do this?"

A: “This is what her policy says:

‘C. Cancellation

1. You may cancel this policy at any time by returning it to us or by letting us know in writing of the date cancellation is to take effect.

L. Mortgage Clause

3. If we decide to cancel or not to renew this policy, the mortgagee will be notified at least 10 days before the date cancellation or nonrenewal takes effect.’

The cancellation clause says the named insured can cancel at any time by letting the insurer know in writing of the date cancellation ‘is’ to take effect. It doesn’t say ‘is or was to take effect,’ so I would say the policy won’t permit a retroactive cancellation.

The mortgage clause in the ISO HO says the mortgagee is entitled to cancellation notice only if the insurer cancels, though you might have a law/endorsement that supersedes that.

Florida agents have password access to their state association’s website and should check out this article for further information: “Back Dating Homeowners Cancellations.”

Bill Wilson is director of the Big “I” Virtual University.

This question was originally submitted by an agent through the VU’s Ask an Expert Service. Answers to other coverage questions are available on the VU website. If you need help accessing the website, email logon@iiaba.net to request login information.