Definition
Cancellation refers to the termination of an auto insurance policy before its scheduled end date, initiated either by the insured or the carrier. An insured may cancel at any time by providing written notice; the carrier then issues a pro-rated refund for unused premium, minus any short-rate fee some non-standard carriers charge. A carrier may cancel a policy mid-term only for specific reasons allowed by Texas Insurance Code §551.104: nonpayment of premium, material misrepresentation on the application, or suspension or revocation of the insured's driver license. Carriers must provide at least 10 days written notice for nonpayment cancellations and 30 days for other reasons. After the first 60 days of a new policy, Texas law restricts carrier-initiated cancellations more strictly. For SR-22 drivers, cancellation automatically triggers an SR-26 filing with DPS, which can restart the compliance period and suspend driving privileges.
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