Generally, a cancellation provision clause requires that whenever a party chooses to cancel the policy, that party must send a written notice to the other one. The insurance company is also obligated to refund any prepaid premium on a pro rata basis. For example, if the insured paid premium for three months and chose to cancel the policy at the end of the second month, the insurance company is required to calculate the premium that applies to the last month and refund it to the insured party.