In construction, insurance is essential to protecting the various parties involved—whether it’s general contractors, subcontractors, or project owners. But what happens if a subcontractor or vendor cancels their insurance after a project begins? How does the contractor or project owner find out? That’s where a Notice of Cancellation provision comes in.

A Notice of Cancellation is a safeguard that ensures the insured party (like a general contractor) gets advance warning if a subcontractor, vendor, or any other insured party cancels their insurance policy. This helps prevent risky gaps in coverage, giving the Certificate Holder—often the contractor or project owner—time to respond before losing protection.

A Notice of Cancellation provision requires the insurance company to send a written notice to the Certificate Holder (the party receiving the Certificate of Insurance, or COI) if the insured party cancels or chooses not to renew their policy. This notice is crucial because, without it, the Certificate Holder may never know that the policy has lapsed, leaving them exposed to potential risks without insurance coverage.

The typical cancellation notice period is 30 days, but some contracts may require a 60-day notice. This gives the Certificate Holder enough time to make arrangements, such as requiring the insured party to purchase new insurance or finding a new vendor or subcontractor, without risking a gap in coverage.

In construction, projects often involve multiple contractors and subcontractors, each responsible for different aspects of the job. Each of these parties is typically required to have insurance coverage that protects the project from various risks. But if one of them cancels their insurance, it could leave everyone else vulnerable.

For example, let’s say a vendor working on a construction project has a General Liability policy but decides to cancel it after starting the job. If no Notice of Cancellation provision is in place, the general contractor might never find out about the cancellation. If an accident occurs, the contractor could be left without the vendor’s insurance protection, which could lead to costly lawsuits or claims.

By requiring a Notice of Cancellation, the general contractor or project owner is notified in advance, allowing them to address the situation before it becomes a problem.

The ACORD 25 form, which is the standard Certificate of Insurance form, includes language regarding cancellations.
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It typically reads:

"Should any of the above described policies be cancelled before the expiration date thereof, notice will be delivered in accordance with the policy provisions."

This means that notice will only be provided according to what’s stated in the policy itself. Some policies might not automatically include a specific notice period, which is why many contractors and project owners require a 30 Days Notice of Cancellation Endorsement in their contracts. This endorsement adds an extra layer of protection by ensuring that the insurance company must notify the Certificate Holder at least 30 days before the policy is cancelled.

While some insurance policies automatically include cancellation provisions, they’re not always enforced. That’s why it’s common for contractors and project owners to explicitly require a 30 Days Notice of Cancellation Endorsement in their agreements.

This endorsement ensures that:

In construction, a Notice of Cancellation provision ensures that general contractors, project owners, or other Certificate Holders are notified if a vendor or subcontractor’s insurance policy is cancelled. This gives them time to respond and avoid risky gaps in coverage. While the ACORD 25 form includes language about cancellation, it’s important to explicitly require a 30 Days Notice of Cancellation Endorsement to ensure proper protection for your construction project.

By including this endorsement in your contracts, you reduce the chances of unexpected insurance lapses and keep your projects—and your business—protected from potential liabilities.