What would allow for cancellation or refusal to issue a policy?

The ability to cancel or refuse to issue a policy hinges on the inherent risk associated with the insurer's exposure to potential losses. A physical change in the property insured that increases hazards directly affects the underwriting process. For instance, if a property undergoes modifications that elevate the risk of damage or loss (such as a significant increase in the number of flammable materials stored, structural deterioration, or changes in environmental factors that increase vulnerability), the insurer may regard this as an elevated risk that justifies not issuing or canceling a policy.

This approach ties back into the fundamental principles of risk assessment and management within the insurance industry, where the goal is to safeguard the financial stability of the insurer while providing coverage that is appropriate to the risk presented. The other options, while they could potentially create issues in different contexts, don't inherently change the risk profile of a property in the same decisive manner as a physical change that increases hazards.