RULE X - CANCELLATION

The Cancellation Condition of the Standard Policy permits cancellation by the insured or by the insurance carrier.

IMPORTANT NOTICE: CANCELLATION NOTICES MUST BE ELECTRONICALLY SUBMITTED TO THEDCRB WITHIN 10 DAYS OF ISSUANCE; PROVIDED, HOWEVER, THAT FAILURE TO FILE SUCHNOTICE WITHIN THE REQUIRED TIME SHALL NOT INVALIDATE ANY CANCELLATION WHICH HASBEEN MADE IN ACCORDANCE WITH THE PROVISIONS OF THE POLICY.

Premium for the canceled policy shall be computed as follows:

1. Carrier Rating Values and Payroll
   Apply carrier rating values to the payroll developed during the period the policy was in effect.
2. Experience Rating
   Apply any experience rating modification in accordance with the rules of the Experience Rating Plan Section. Refer to Rule VI-E.
3. Deductible
   Apply the appropriate deductible credit factor, if any, in accordance with the deductible table in Section 2of this Manual.

Compute the premium as provided in B above if a policy is cancelled by the insured when:

1. All the work covered by the policy has been completed, or
2. All interest in any business covered by the policy has been sold, or
3. The insured has retired from all business covered by the policy.

The premium for the canceled policy shall be based on the Short Rate Cancellation Table in this rule and computed as follows:

1. Actual Payroll
   Determine the payroll developed during the period the policy was in effect.
2. Extended Payroll
   Extend such payroll pro-rata to an annual basis.
   Example
   A payroll of $55,500 for 185 days would produce a payroll of $109,500 on an annual basis:

   $55,500 x 365/185 = $109,500

3. Carrier Rate 
   Apply carrier rate to the payroll in 2a. above.
4. Experience Rating
   Apply any experience rating modification in accordance with the rules of the Experience Rating Plan Manual. Refer to Rule VI – 1.
5. Deductible
   Apply the appropriate deductible credit factor, if any, in accordance with the deductible credit schedule in Section 2 of this Manual.
6. Short Rate Percentage
   Based on the time the policy was in effect, apply the short rate percentage shown in the Short Rate Cancellation Table in this rule to the annual premium computed on the basis of the extended payroll in order to determine the short rate portion of the annual premium.
7. Example of a Short Rate Cancellation

   A policy in effect for 185 days develops actual payroll of $55,500, carrier rate $.50.
   a. Payroll extended to annual basis =$55,500 x 365/185 = $109,500
   b. Annual premium = $109,500 x $.50 = 548
   c. Short rate percentage for 185 days = 61%
   (See Table on next page)
   d. Short rate premium for cancelled policy =
   $548 x .61 = $334
   e. Total premium for cancelled policy = $334

   Refer to the Rules and Interpretation Section for an alternative method of short rate computation.

Short Rate Cancellation Table

Short Rate Cancellation Table (continued)

Short Rate Cancellation Table (continued)

Short Rate Cancellation Table (continued)

Pro Rata Cancellation Table (continued)