What does the term "cancellation" refer to in insurance?

The term "cancellation" in insurance specifically refers to the termination of an insurance policy before its expiration date. This can occur for various reasons, including non-payment of premiums or a mutual agreement between the insurer and the insured. When a policy is canceled, the insurance coverage is no longer in effect, and the insured is typically not covered for any future claims that fall under the policy's terms.

Understanding "cancellation" in this context is crucial, as it highlights the importance of maintaining the policy in good standing to ensure continued coverage. This differs from modifications of policy terms, adding coverage, or reductions in premiums, which all imply changes to the existing policy rather than its termination.