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Workers Comp Cancellation Notice – Why Did We Receive It?


Employer Received Cancellation Notice Cancelling Workers Comp Policy

A Cancellation notice cancelling  a workers comp policy by a Workers Comp carrier can be a frightening experience for a business owner, Risk Manager, CFO, HR manager, or whoever internally handles the Workers Compensation claims for an employer.

Picture Of Hand Presenting Cancellation Notice Symbol On Screen

We received this question earlier this week from a small business owner – I received a certified return receipt letter on 06/05/2012 informing my company is being cancelled for Workers Comp insurance. What do I do now? BTW, this employer became one of our clients due to a policy mistake.

In this case, we recommend:

  1. Finding out the true cancellation date. An insurance carrier has to give your company notice from the date of receipt before the cancellation date – usually 10 or 30 days. The date will be on your notice or on a prior notice. Your policy is usually cancelled at 12:01 AM of the cancellation date.
  2. #1 does not necessarily apply if you are being cancelled for non-payment of undisputed premium
  3. Contacting your agent – we do not recommend this if you are coming up on an imminent cancellation date due to non-payment of premium. You need to talk to the insurance carrier’s collection department ASAP.
  4. Searching for any additional documents from the carrier. They will have sent your company other notices. I have never seen a carrier cancel an employer out of the blue. Is there another person in the company that handled the documents? We have seen employers toss such notices thinking they were advertising.
  5. If you are in the cancellation grace period under #1, find out the reason for cancellation. There will usually be a phone number to call.
  6. Contact your agent immediately if the reason for cancellation had nothing to do with premium payment. You will need new coverage. Non-payment of premium accounts for approximately 90% of cancellation notices that we see from companies.

    Picture of Claims Files On The Table Cancellation Notice Employer Received
    (c) 123rf.com
  7. Finding out the results of your last premium audit. If you had a premium audit and bill that went unpaid, what was the reason for the non-payment? This type of cancellation occurs usually early in the next years’ policy.
  8. Disputing the bill, except you need a valid and legal reason. If you are disputing a premium bill and are unsure if you really owe it, then you may need to bring in a premium expert.
  9. Paying the bill. You will lose your leverage if you have a valid dispute and pay the premium audit bill. However, if you owe it, pay it.
  10. As a very last resort, contact your Department of Insurance. They usually have an ombudsman that may be able to help you. The ombudsman may actually work for the Industrial Commission or rating bureau depending on your location.
Graphic Cancellation Notice Button


The bottom-line recommendation for cancellation notices is that you must act NOW. Some states are now assessing heavy fines for each day that your company does not have WC coverage. The worst-case scenario is an employee having an on-the-job injury and your company has to pay out-of-pocket along with hefty fines.  The cancellation notice is a ASAP priority.


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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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