Cancelling your business insurance: Châtel law, renewal dates and switching insurers without a coverage gap

To cancel a business insurance policy in France, the default route is cancellation at the annual renewal date: a notice sent to the insurer at least two months before the policy's anniversary, as set out in Article L113-12 of the French Insurance Code. Neither the Hamon law, which lets private individuals cancel at any time after one year, nor the Châtel law, which protects them against forgotten automatic renewals, applies to policies a company takes out for its business. For professional risks, the contract may even depart from the annual rule. That leaves a few mid-year exits, and one underestimated issue: the coverage gap.

Can you cancel a business insurance policy under the Hamon or Châtel law?

No. The Hamon law (Article L113-15-2 of the Insurance Code) allows cancellation at any time after one year, but only for private individuals outside their professional activity, and only for motor, home, affinity and, since December 2020, supplementary health policies.

The Châtel law (Article L113-15-1) requires the insurer to remind the policyholder of the cancellation deadline in the renewal notice, at least fifteen days before it; otherwise the policyholder gets twenty extra days after the notice is sent, or may cancel at any time if the information was never given. Here again, the text covers private individuals outside their professional activity. Some insurers apply it voluntarily to business clients: check your general conditions, but do not rely on it. The same goes for "three-click" online cancellation (Decree no. 2023-182 of 16 March 2023), reserved for consumers.

How do you cancel a business policy at the annual renewal date?

The standard route is Article L113-12: after the first year, the policyholder may cancel each year at the renewal date, with at least two months' notice. Tacit renewal is the mechanism by which the policy automatically renews at each anniversary, for a further year, as long as nobody terminates it.

The same article adds a sentence executives rarely read: these rules may be departed from "for the coverage of risks other than those of private individuals". A business policy can therefore stipulate three months' notice, or a fixed three-year term with no annual cancellation right. Reread the "term and cancellation" clause before writing any letter.

For policies renewing on 1 January, the deadline is 31 October with the statutory notice, and 30 September if the contract requires three months. Schedule your policy review in June.

Which grounds allow mid-year cancellation?

Article L113-16 opens a mid-term cancellation when the insured risk changes in nature following a change of circumstances: permanent cessation of activity, retirement, change of profession. The request must be made within three months of the event and takes effect one month after receipt. A premium increase is not a statutory ground for a business; most business policies do, however, include a revision clause allowing cancellation within one month of notification of an increase not linked to the index. That is the clause to look for when the renewal notice shows +15%.

The sale of an insured asset (Article L121-10) transfers the policy to the buyer, who may cancel it, as may the insurer; for a vehicle sold, the policy is suspended by operation of law the day after the sale. Finally, if the insurer cancels your policy after a claim, you have one month to cancel in turn all the policies you hold with it.

What form should the cancellation letter take?

Since 2019, Article L113-14 accepts several forms of notice: a letter or any other durable medium, electronic registered mail, a declaration at the insurer's head office, a bailiff's deed, or any means provided for in the contract. Registered mail remains the safest choice: the deadline runs from the date of dispatch and the receipt is proof. A durable medium is any means of storing information and reproducing it unchanged, such as an archived email.

The letter states the company name, policy number, requested effective date, the ground invoked (Article L113-12 or L113-16 with supporting evidence) and a request for written confirmation. Send it to the insurer, not only to your intermediary, and keep the acknowledgement of receipt.

Cancelling is not the hard decision; the hard decision is checking that the new policy starts exactly where the old one stops, without leaving a single day or a single past claim uninsured.

How do you switch insurers without a coverage gap?

A coverage gap is the period, or the category of claims, for which no insurer pays because the old policy has ended and the new one does not pick up the risk. For property damage, align the dates and never cancel before you have written confirmation of the new policy.

Article L124-5 distinguishes two triggers. On an occurrence basis, the policy in force when the harmful event occurred pays, even if the claim arrives years later: cancellation creates no gap. On a claims-made basis, the norm in professional liability, D&O and cyber, the policy in force when the victim makes the claim pays. A 2027 claim over a 2025 service therefore falls under the new policy, provided it includes retroactive cover.

Retroactive cover (prior acts coverage) is the clause by which the new insurer agrees to cover future claims relating to events prior to its inception date, as long as the insured was unaware of them at the time of subscription. In addition, the old policy includes an extended reporting period: at least five years after cancellation during which the former insurer remains liable for claims linked to prior events, if they are not covered elsewhere. Before cancelling a professional liability policy, check three lines: the retroactive date of the new policy, the length of the old policy's extended reporting period, and the notification of known circumstances to the former insurer before the policy ends.

Which mistakes cost you another year?

The first is discovering too late a fixed-term or three-month-notice clause, perfectly valid for a professional risk. The second is cancelling through the outgoing broker without copying the insurer. The third is forgetting ancillary policies (assistance, legal protection, fleet) with different renewal dates. The fourth, typical of fast-growing companies, is going to market without updating the scope: turnover, headcount, actual activities. Our ten levers to reduce a premium start there.

Frequently asked questions

Does the Hamon law apply to business insurance?

No. Article L113-15-2 of the Insurance Code reserves cancellation at any time after one year to private individuals outside their professional activity, for motor, home, affinity and health policies.

What is the notice period to cancel a business policy?

At least two months before the renewal date under Article L113-12. For professional risks, the same article allows the contract to depart from the annual rule: three months' notice or a fixed multi-year term are valid if they appear in your special conditions.

Can you cancel after a steep premium increase?

Not on the basis of the law alone. Cancellation for a rate increase depends on a revision clause written into the policy, which generally opens a one-month window after notification of the increase.

What happens to a claim reported after switching insurers?

On a claims-made basis, it falls under the new policy if it includes retroactive cover and you were unaware of the event at subscription; otherwise under the old policy through its extended reporting period of at least five years.

At Lesto, we start every insurer switch with a calendar: renewal dates, notice periods and term clauses for each of your policies, then a consultation of nine insurers on average and a check of retroactive cover and extended reporting periods before any cancellation letter. Want to know what your current policies are really worth and when you can exit them? Have your insurance analysed: answer within 72 hours.