Lost Policy Release (LPR): What it Is and How It Works

A lost policy release (LPR) is a signed statement in which the insured releases an insurance company from liability for a particular policy that has been lost, destroyed, or is being replaced. Historically, insurers required the original policy documents to cancel coverage; an LPR served as proof that the policyholder intentionally canceled coverage when the original policy could not be produced.

Key points

• An LPR releases the insurer from future responsibility for losses under the named policy.
• Modern electronic procedures have largely eliminated the need for LPRs in routine cases.
• LPRs may still appear when switching auto insurers or when a physical policy is lost and a replacement is issued.
• Cancellation types tied to an LPR affect the refund amount: flat, pro‑rata, or short‑rate.

How an LPR works

When a policyholder signs an LPR, the insurer records the cancellation and is no longer liable for claims after the cancellation date tied to the replaced or canceled policy. Today this process is often handled online or by phone, but the legal effect is the same: the policyholder relinquishes rights under the old policy once the release is executed.

Types of cancellation

When completing a cancellation or lost policy release, insurers typically apply one of three methods for calculating any refund of premium:

• Flat cancellation: Used when coverage never went into effect. The entire premium is typically refunded because the insurer was never exposed to risk.
• Pro‑rata cancellation: The insurer refunds the unearned premium for the unused portion of the policy period. “Unearned premium” is the portion of the premium not yet applied to cover risk.
• Short‑rate cancellation: Used when the insured requests early cancellation or fails to pay premiums; the insurer applies a penalty, so the refund is smaller than a pro‑rata calculation.

When an LPR may be required

• The original policy document is lost or destroyed and the insurer needs written confirmation of cancellation.
• A replacement policy is issued and the insurer wants a release to avoid overlapping liability.
• A policyholder switches auto insurers and the new insurer or the incumbent requires a signed release (in many cases this now happens electronically).

Practical steps if you need to cancel a lost policy

1. Contact your insurer immediately and explain that the policy is lost and you want to cancel or replace it.
2. Ask whether an LPR is required and whether the process can be completed electronically.
3. Confirm the cancellation date and method of refund (flat, pro‑rata, or short‑rate).
4. Request written confirmation showing the effective cancellation date and any refund details.
5. Keep copies of all communications and signed forms.
6. If you’re switching insurers, confirm that the new coverage is effective before the old policy is canceled to avoid gaps.

Risks and tips

• Once you sign an LPR, the insurer is not responsible for claims after the cancellation date—verify that date carefully.
• If a replacement policy is issued, retain old policy documents until you’re certain there are no outstanding issues.
• Ask for a clear explanation if a short‑rate penalty applies and compare refund calculations.
• If you suspect fraud or incorrect cancellation, escalate to a supervisor and request documentation of the denial or cancellation rationale.

Conclusion

Lost policy releases formalize cancellation when original policy documents are unavailable or when a replacement policy is issued. While less common today due to electronic recordkeeping, they still carry important legal consequences. Always verify cancellation dates, request written confirmation, and keep records of communications to protect your coverage and potential refunds.