Deposits in cancellation

Midterm cancellation

In PolicyCenter, whenever the midterm cancellation binds, the policy period has a pending (scheduled or in progress) final audit. PolicyCenter resends the existing collateral requirement to BillingCenter. PolicyCenter does not recalculate the deposit amount. Even though the cost of the policy reduces after cancellation, PolicyCenter does not reduce the deposit requirement explicitly. After BillingCenter processes the final audit, the billing system can return any extra money to the insured.

Flat cancellation

For PolicyCenter, when the flat cancellation binds, the policy period does not have a pending final audit. In the process of BillingCenter processing the cancellation request, the collateral billing instruction releases the deposit by sending $0 (zero dollars) as the new collateral requirement.

In BillingCenter, the active collateral requirement status changes to closed. BillingCenter releases money paid and held as “cash held by requirements” balance, which sets the money to the category of collateral cash held. The collateral cash is available for transfer. Typically, the insurer eventually transfers this amount to either pay off the final audit balance or apply the funds to the segregated collateral requirement of the renewal policy period.