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6 minute read Published on Aug 4, 2022 by BrokerLink Communications
Are you looking to cancel your car insurance policy early and want to know if you can and what happens if you do? BrokerLink can help with these answers. Car insurance policies typically last 12 months, but that doesn’t mean you can’t cancel your policy before it expires. Keep reading for more information on how to cancel your car insurance policy early, the possible penalties for doing so, and a step-by-step guide on how to cancel your car insurance.
Drivers might want to cancel their car insurance policies for various reasons. From moving provinces to selling your vehicle, below are a few of the most common reasons drivers in Canada may cancel their auto insurance policies early.
If you move to another province or territory, or another country entirely, your existing insurance company may not offer coverage there. As such, you will need to cancel your existing policy and purchase a new one from an insurance company that offers coverage in your new location. To avoid a lapse in coverage, set up your new car insurance plan at least a few weeks in advance of cancelling your current policy.
You may wish to cancel your car insurance policy early if you sell your vehicle with no plans to replace it. BrokerLink’s experts recommend maintaining coverage right up until the new owner takes possession and the title has been transferred.
Insurance companies are constantly changing their rates. Therefore, you may have originally purchased a policy thinking it was a great deal, only to discover that you can find a much better deal with a different provider. At this point, you may be tempted to cancel your existing policy early and purchase a new policy at a lower rate. If you choose to go this route, make sure your new policy is valid before cancelling your existing coverage. While it’s generally recommended to wait until your existing policy is up for renewal before buying a new one, you may decide you don’t want to wait.
The answer to this question is it depends. The length of time that passes between buying the policy and cancelling it will determine the fees you are required to pay, if any.
Generally speaking, if you cancel your car insurance policy before the end of the policy term, your insurer will usually charge a fee. Car insurance cancellation fees vary by company. Be sure to read the terms of your policy closely, to find out exactly how much you will be charged for cancelling.
If you cancel your auto insurance policy early, you may be entitled to a refund. However, it is rarely a full refund. If you opted to pay for your policy annually, meaning you paid for all of it upfront, the insurance company may refund the remaining balance, prorated based on the number of days the policy was in effect. However, if you pay for your insurance policy monthly, then you may not get a refund. Further, since cancellation and administration fees will likely be charged, even if you are entitled to a refund, it might not be much once you take into account these additional costs.
It’s important to note that most car insurance policy add-ons are non-refundable. And if you purchased add-ons from another provider, you may have to cancel your coverage with them, as well as your main insurance company.
Other circumstances in which you may not be entitled to a refund are if the insurance company decides to cancel your policy or if you made a claim on the policy.
Finally, if you are entitled to a car insurance refund, insurance companies are not typically obligated to refund your money in a given time period. Some auto insurance contracts stipulate that in the event of a policy cancellation, the company will issue a refund “within a reasonable timeframe.” Since there is no set definition for this, you should be prepared for the process to take a while. For this reason, it’s usually best to wait until your policy is up for renewal to cancel it.
Yes, you can cancel your car insurance policy if you’ve made a claim. However, the insurance company may not provide you with a refund. On top of that, you may have to pay a cancellation fee. To learn more about cancelling a policy after filing a claim, refer to: how to cancel a car insurance claim.
If you stop making payments without cancelling your car insurance policy, you could face serious consequences. Your insurance company will continue requesting payment from you and charging you for your policy if it remains active.
In addition to affecting your credit rating, failing to notify your insurance company that you want to cancel your car insurance coverage can lead to your insurance company cancelling your policy anyway. When an insurance company cancels your policy due to non-payment, it can make it far more difficult to obtain a new policy in the future. Specifically, you will not be able to buy an auto insurance policy on a payment plan from a different insurance company until the balance is paid with your previous company.
Therefore, unless you can afford to pay for a new policy upfront, it will be extremely difficult to find new coverage. An inability to afford coverage ultimately prevents you from legally driving, since car insurance is mandatory throughout Canada. Driving without insurance can lead to fines worth thousands, if not tens of thousands, of dollars, licence suspensions, and even jail time. If you find yourself unable to make car insurance payments, contact your insurance company immediately. Informing your insurer of your predicament can prevent a non-payment cancellation. They may even be willing to work out a revised payment plan that works for you.
Should you decide that cancelling your car insurance policy is in your best interests, BrokerLink has put together a guide to doing just that. Check out our step-by-step guide to cancelling auto insurance early in Canada:
BrokerLink’s insurance advisors are experts at finding great car insurance policies at low rates. You can count on us to find a policy that meets your lifestyle and budget. Simply give us a call and then sit back and relax while we compare quotes and unlock discounts on your behalf.
To learn more about finding a new policy, contact BrokerLink today. We can be reached by phone, email, or in person at any one of our locations in Canada. You can also take advantage of our online quote tool and request a free insurance quote today. All BrokerLink quotes are accurate, competitive, and 100% obligation-free. Plus, they take just minutes to obtain!
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