During which type of cancellation is no coverage provided, and the premium must be refunded?

The correct choice reflects a situation where no coverage is provided, and the premium must be refunded to the insured. In flat cancellation, both the insurer and the insured agree to cancel the policy immediately, which means the insurer provides no coverage from that point forward. Because the policy is terminated right away, there is no risk present, and the insurer is obligated to refund the entire premium.

In contrast, pro rata cancellation typically involves returning a portion of the premium corresponding to the unused portion of the coverage period, meaning coverage is provided until the cancellation takes effect. Short rate cancellation may also require a partial refund but includes a penalty, reflecting the cost of the insurer's administrative expenses. Nonrenewal does not involve cancellation of an active policy but rather means that the policy will not be renewed once it expires, and coverage continues until the expiration date, thus not requiring an immediate premium refund.