When you purchase car insurance, your insurance broker will likely walk you through the terms of your policy, which includes the policy’s deductible, limit, and term. They might also explain what happens in the event that you wish to cancel your policy before the term ends. But what about if the insurance company decides to cancel your policy? Car insurance policies are contracts. Both parties - the insurer and the policyholder - must agree to specific terms in order for the policy to be valid. If a policyholder fails to hold up their end of the bargain, the insurance company is within its rights to cancel the policy. Below, we dive into the most common reasons your insurance provider could cancel your car insurance policy and what you can do in the event yours is cancelled.
Can an insurance provider cancel my policy without asking?
The short answer is yes. Your insurance company is allowed to cancel your auto insurance policy without asking. However, they must provide written notice of their intention to do so. The amount of advance notice they must give you varies. If you are concerned your insurance company might cancel your policy, contact the experts at BrokerLink for advice.
Reasons your insurance company could cancel your policy
Car insurance is provincially regulated in Canada. This means that there are only a handful of circumstances in which insurance companies are allowed to cancel a policyholder’s coverage.
Please note that while a rare occurrence, insurance companies can cancel your auto insurance policy for any reason during the first 60 days of the term. Below are some of the most common reasons an insurance company would cancel your car insurance policy.
Fraud
Committing insurance fraud is one reason an insurance provider could cancel your policy. Examples of insurance fraud are filing fraudulent claims or lying about how a loss occurred. To avoid having your policy cancelled due to fraud, always be honest with your broker and insurance company.
Non-payment
The most common reason by far that auto insurance policies are cancelled in Canada is due to non-payment. Anytime you skip a payment on your policy, your insurance provider will send you a registered letter advising you of the number of days you have to pay the outstanding balance, e.g. typically 15. If the payment is still not made, the insurance company may cancel your policy. Since car insurance is mandatory throughout Canada, if your policy is cancelled, you will be unable to drive. Driving uninsured can result in serious fines, license suspension, and even jail time, depending on the province.
In addition, you will not be able to buy a car insurance policy on a payment plan from a different insurance company until the balance is paid with your previous company. No new insurance provider will be willing to offer you a payment plan until your arrears are paid with the last provider. Therefore, unless you can afford to pay for a new policy entirely upfront, it will be extremely difficult to obtain a new policy without paying off your debts.
Should a situation arise in which you are unable to pay the next instalment of your car insurance policy on time, notify your broker or insurance company as soon as possible. Informing your insurer of your predicament can prevent a non-payment cancellation.
Misrepresentation
Misrepresentation is another reason that an auto insurance company can cancel your policy. If a policyholder is not truthful when they apply for car insurance, and the company finds out, their policy could be voided. Examples of misrepresentation include failing to tell your broker or insurance provider that you use your vehicle for both personal and commercial reasons (perhaps you are an Uber Eats driver on the side) or not listing the additional people in your family who will be driving the vehicle. Non-disclosure or lies of omission also count as misrepresentation. If you didn’t tell the whole truth when you filled out your application or filed a claim with your insurance company, the insurer could cancel your policy.
Change in situation
A change in situation, also known as a material change in risk, may cause an insurance provider to cancel your policy. For example, if you are diagnosed with a medical condition that makes it dangerous to drive, your insurer may be within its rights to cancel your policy.
Too many claims
If you file a large number of claims over a short period of time with your insurance company, they may cancel your policy. Filing too many claims usually means you have been involved in an above-average amount of collisions or traffic violations, which can lead your insurer to cancel your auto insurance policy.
Suspended driver’s license
Provinces and territories in Canada can suspend and revoke licenses for many reasons. If you are caught driving under the influence of drugs or alcohol, you’ve racked up too many tickets, or you’ve exceeded a certain number of demerit points, the provincial government may revoke your driver’s license. If this happens, your insurance company may cancel your auto insurance policy.
Cancellation vs. non-renewal
There are a few key differences between cancellations and non-renewals, though the outcome of each is the same: your existing insurance policy with that company will no longer be valid. Non-renewals occur at the end of the policy term, whereas cancellations can occur at any point during the policy term. Specifically, non-renewals are when a policy is due for renewal and the insurance company decides not to continue the policy after its expiration date. The reasons for non-renewal can be similar to cancellations, ranging from non-payment and fraud to misrepresentation on an application or a change in situation.
How to find out if your auto insurance policy has been cancelled
As mentioned, your insurance provider is legally required to give you advance notice of a policy cancellation. The notification will either be written, sent in the mail, or sent electronically by email. The notice will include the time frame for the cancellation (which varies across Canada), as well as the reason for the policy cancellation. Generally speaking, cancellation due to non-payment typically requires 10 days’ notice, while a notice of cancellation for other reasons, such as fraud or driver’s license suspension, may range from 20 to 45 days.
If you receive a cancellation notice from your insurance provider, whether by mail or email, it should be dealt with immediately. If you suspect the insurance company has the wrong information or the reason is a late payment, set up an appointment to meet with your insurance broker and set the record straight or make the missing payment.
You might be able to have your policy reinstated if you pay your outstanding balance, especially if paid within the grace period (it will be harder to have your policy reinstated if you only make payment after your policy has lapsed). If your insurance provider agrees to reinstate your policy, you may be required to sign a form that says you did not experience any losses during the grace period and that you agree not to file any insurance claims from incidents that may have arisen during the grace period.
Ultimately, the best-case scenario is that you can resolve the issue with your insurance provider before your policy is cancelled. This will ensure you maintain continuous coverage and save you from having to search for a new policy. Keep in mind that your insurance provider may still raise your rates.
If you think the cancellation of your auto insurance policy is unlawful or unfair, and your attempts to resolve it directly with the insurance company proved fruitless, you can contact the Financial Consumer Agency of Canada. You may be able to file a complaint with the Financial Consumer Agency of Canada, and if they find a pattern of unfair cancellations, they could penalize your insurance provider.
Presenting your case to your insurance company
If you think there’s a chance your insurance company might reinstate your insurance policy, then we always advise pleading your case. To plead your case effectively, you will need to provide concrete proof that you are not a high-risk driver.
For example, perhaps the majority of claims files were in an old neighbourhood and you can prove that you have had few if any claims in your new neighbourhood. Or perhaps various life circumstances have changed that have made you more stable and responsible (maybe you started a new job or moved into your own home).
In general, it’s a good idea to provide proof that demonstrates you are at a reduced risk of filing claims in the future. You may also wish to mention the steps you’ve taken to increase your driving safety. Perhaps you enrolled in an approved driving school or installed anti-theft devices on your vehicle. Further, if most claims were under $5,000, you could ask the insurance company if you could increase your deductible to mitigate their risk. You could even inquire about an alternative car insurance policy, like one tailored to high-risk drivers. One final element of presenting your case to your insurance company is to show your value. If you have been a loyal customer for years, point out how long you’ve been with the company, how much money you’ve spent with them (add up all policies purchased), and the friends or family members you’ve referred to them.
How long will it take the insurance company to review my case?
You should expect the insurance company to require several days to review your case, at a minimum. Plus, if they refuse to reinstate your insurance after reviewing your case, you may wish to escalate your case to a higher level, which can take even longer. Therefore, we advise you to contact your insurance company and present your case as soon as possible after receiving the notice of cancellation.
What to do if your insurance policy is cancelled
If your car insurance provider cancels your policy, you may be required to notify your provincial ministry of transportation. Upon receiving notification of your policy cancellation, you should begin shopping for a new car insurance policy as soon as possible. Working with a reputable broker from BrokerLink is one of the best ways to find a quality car insurance policy in Canada. You can have your broker obtain quotes from the top insurance companies in Canada. However, if they are unwilling to offer you insurance owing to your policy cancellation, you may need to consider a high-risk car insurance policy. These policies are designed for drivers that have been deemed high-risk. For this reason, they tend to be more expensive, but they allow you to get behind the wheel. And without a valid car insurance policy, doing so would be illegal.
The consequences of driving without insurance in Canada
Driving without insurance in Canada is illegal. Car insurance is mandatory in every Canadian province and territory. Therefore, if you are caught driving uninsured, you could face serious consequences. Depending on which province or territory you reside in, these consequences may include fines worth thousands if not tens of thousands of dollars, jail time, and license suspension. Fines for repeat offenses are often double what they are for first-time offenses. In addition, if you get into an accident while driving uninsured, you could be responsible for paying all associated expenses (medical fees, vehicle repairs, lawsuits, etc.) out-of-pocket. Given these serious consequences, driving without insurance in Canada is not worth the risk. Avoid the possibility of fines and jail time by always having an up-to-date car insurance policy. Contact BrokerLink for help finding a comprehensive yet affordable auto insurance plan in your province.
Tips to avoid having your policy cancelled
Since insurance companies can cancel auto insurance policies for a number of reasons, and policy cancellations can have serious consequences for policyholders, we recommend doing everything in your power to avoid cancellation. The experts at BrokerLink have put together a list of their top tips for avoiding having your car insurance policy cancelled by the insurance company.
- Make payments on time: As non-payment is the most common reason for policy cancellations, avoid this by always paying your insurance bills on time. To decrease the odds of missing a payment, try to pay for your policy annually or quarterly so you have fewer payment due dates to keep track of. If this isn’t feasible and you opt for monthly payments, set a reminder on your phone or computer to ensure you don’t simply forget to make your payment. If you are unable to make the payment due to financial constraints, contact your insurance provider in advance of the due date, notifying them that you will not be able to make your payment by the agreed-upon date. They may be willing to work with you to set up a payment plan that works with your budget and allows you to maintain your coverage.
- Avoid lying: Never try to hide things from your insurance company. You might think that lying is a clever way to reduce your car insurance rate, but if caught, you can face serious consequences. As you now know, policy cancellations can make it difficult to obtain insurance in the future and lead to higher insurance premiums. Therefore, whether you’re filling out your car insurance application or filing a claim with your insurance provider, always be truthful.
- Obey the rules of the road: Driving safely and responsibly has tons of benefits. Not only does obeying the rules of the road keep you safe by reducing your risk of getting into an accident, but having a stellar driving record can lower your insurance premium and ensure your license does not get revoked or suspended. Reckless driving, speeding, fleeing the scene of an accident, or driving under the influence of drugs or alcohol are surefire ways to get your license revoked and your policy cancelled. Not paying fines and not appearing in court can also lead to license suspensions. Thus, to avoid having your car insurance policy cancelled, always follow the rules.
Contact BrokerLink to learn more about car insurance cancellations
Here at BrokerLink, we are car insurance experts. We know the industry better than anyone and can answer any questions you have pertaining to car insurance cancellations. Whether you want tips on how to prevent your car insurance policy from being cancelled or recently received a notification of cancellation and want advice on the next steps, we are here.
In the event your policy is cancelled, BrokerLink can also help you find a new policy. When you work with us, we take the time to understand your unique needs and circumstances so that we can find the coverage that’s right for you. Sit back and relax while our insurance advisors obtain quotes and compare policies on your behalf. Finding auto insurance with BrokerLink couldn’t be easier!
Get started by contacting BrokerLink today. We are pleased to offer free car insurance quotes to all drivers in Canada, including high-risk drivers. Contact us by phone, email, in person, or use our online quote tool to request a free quote now. We hope to hear from you!
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