The servicing carrier of a Commercial Auto Insurance Plan (CAIP) policy may cancel during the policy period if the insured

• A. changes coverage
• B. fails to make the final premium payment
• C. files a claim
• D. fails to maintain coverage

Answer: (B)

The key idea is that mid-term cancellation for a CAIP policy happens when the insured does not meet premium obligations. The final premium is the last installment due to complete payment for the policy term; if that amount isn’t paid, the servicing carrier has the right to cancel the policy during the policy period. This reflects a financial condition of the agreement: without timely payment of the final premium, the carrier cannot maintain the risk coverage.

Filing a claim, changing coverage, or simply not maintaining coverage are not the grounds for cancellation in this context. Filing a claim is part of how the policy is used and dealt with under the terms; changing coverage typically requires endorsements or a new agreement rather than cancellation due to the act of changing; and not maintaining coverage would be more about policy lapse or nonrenewal rather than the specific cancellation for nonpayment of the final premium. The scenario described—nonpayment of the final premium—directly concerns the insured’s payment obligation and aligns with how CAIP mid-term cancellation is structured.