What is one result of a flat cancellation of an insurance policy?

In the context of flat cancellation of an insurance policy, the correct answer highlights that when a policy is flat cancelled, the insurer must refund the premium and provides no coverage. Flat cancellation occurs when a policy is cancelled at the request of the insured before the policy's effective date or during the first few days of coverage, as stipulated in the policy terms.

During this process, since no coverage has been utilized and the policy is cancelled from the start date, the insurer is obligated to return the full amount of the premium paid by the insured. Hence, the insured is left without any insurance coverage, as the cancellation means that the policy was never in effect.

This distinguishes flat cancellation from other types of cancellations, where terms and conditions might apply differently after coverage has begun. By understanding this concept, individuals can grasp how insurance policies function in terms of cancellation and premium refunds, ensuring clarity on the implications of their cancellation requests.