Which situation may lead an insurer to cancel a policy?

An increase in property hazards is a significant reason that can lead an insurer to cancel a policy. Insurance is fundamentally about risk management; when the risks associated with a property increase, the insurer's exposure to potential claims also grows. This escalation can arise from various factors, such as a new hazard being introduced or environmental changes that elevate the likelihood of damage or loss.

When an insurer assesses the risks and determines that they have become unacceptable based on the current terms of the policy, they may opt to cancel coverage to mitigate potential losses. This decision helps protect the insurer's financial integrity while ensuring that they remain within their risk tolerance levels.

In contrast, while requesting additional coverage might lead to a review of the policy, it typically does not result in cancellation. Loss of income from property does not affect the risk associated with the physical property itself regarding hazards. Similarly, changes in legal regulations might alter how insurance is structured or required but do not directly lead to the cancellation of a policy unless they inherently increase the risk associated with the insured property.