Definition - What does Flat Cancellation mean?
A flat cancellation is when a policyholder cancels an insurance policy on the effective date, the day it is meant to go into effect or on the renewal date. In these circumstances, the policyholder typically has not paid any premiums so there is no need for a refund.
Insuranceopedia explains Flat Cancellation
Flat cancellations are much simpler than pro rata and short rate cancellations. With the latter types, money has already been paid in advance and so the unearned premium money needs to be dealt with. However, with flat cancellations, the insurance carrier and the policyholder simply part ways.