A cancelled car insurance policy can be a major headache, especially since driving without the required car insurance is illegal in Ontario. Understanding what causes a policy cancellation and what you can do to avoid it is crucial if you want to keep driving without issues.
Why Do Policies Get Cancelled?
Insurance policies get cancelled for many reasons, but non-payment—or failure to make a payment on a policy—is among the most common causes.
Aside from non-payment, here are some of the most common reasons providers cancel car insurance:
- Misrepresentation: This is when clients withhold key details or provide false information about their driving history or vehicle usage. For example, failing to mention that a vehicle will be used for both personal and commercial use.
- Change in situation: Also known as material change in risk, this is when significant life changes prompt providers to reconsider whether the policy is right for the client.
- Fraud: This includes filing fraudulent claims, lying about claim details or being dishonest about the circumstances of a loss.
- Policy terms violation: Your policy can be cancelled if you use your vehicle for unauthorized purposes that go against your policy’s terms.
What Can You Do If You Receive a Car Insurance Cancellation Notice?
Insurers are required to notify their clients that they’ll be cancelling their insurance. Often, the provider will provide a reason for the cancellation and give a timeframe for when it’ll take effect.
You can make a case to your insurance provider if you think that your policy cancellation is unjustified. The provider will review your case and inform you if your policy can be reinstated.
For non-payment issues, you’ll have to settle your bill before you can get your policy reinstated.
Under the Insurance Act, consumers have the right to be treated fairly by their provider, be given written reasons for being denied insurance and register a complaint about their company.
If the insurer denies your request or you cannot contest it, you must look for a new policy. Remember, driving without insurance is illegal in Canada. If you’re flagged by your insurance provider as a high-risk driver, you may have to hire a broker to help you find a provider that will work with you and give a reasonable rate.
What If You Can’t Afford a Car Insurance Payment?
If you’re worried about meeting the deadline for your premium payment, there are some steps you can take to avoid immediate policy cancellation.
If your payment is due soon, notify your insurer that you can’t make the payment as soon as possible. Your insurer may help you set up a new payment plan or extend your deadline temporarily to give you more time to make the payment.
Applying for Car Insurance After Cancellation
If you have no other option but to find a new insurance policy, follow these steps:
- Evaluate your situation: Identify what caused your policy to be cancelled. This will help you understand what steps you have to take to contest your cancellation or apply for a new policy.
- Review your driving record: Get a copy of your driving record so you understand what insurers will take into account when considering your case.
- Compare quotes: Shop around to compare quotes across different insurance companies. Some providers may be more lenient than others regarding high-risk driving status.
- Be transparent about your situation: Be honest about your prior cancellation. This will help build trust with your new insurance provider and avoid any issues in the future.
- Find payment options you can handle: If you had trouble paying your premiums in the past, ask your insurer if they offer flexible payment terms to avoid future cancellations.
How Does a Cancelled Insurance Policy Affect You?
Cancelled insurance can affect your ability to get good premium rates even when you change providers.
According to MyChoice’s internal data, your premiums can increase by 25–30% on average after a non-payment cancellation appears on your record.
Read More: Understanding the Consequences of Lapses in Your Car Insurance History
Navigating Policy Cancellation for High-Risk Drivers
Insurance providers are always considering the risks involved with insuring a client. The higher the risk, the more expensive it will be for the provider. Therefore, insurance companies usually charge much higher rates to high-risk drivers. In some cases, providers will refuse to insure a high-risk driver.
If you find yourself in this situation, you can apply for insurance from the Facility Association, an entity established by the automobile insurance industry to ensure that car insurance is available to car owners and licensed drivers who are unable to get car insurance from an individual insurance provider.
Facility Association doesn’t issue policies but works with companies that do. These companies collect premiums and handle claims on its behalf.
This is often considered the last resort for drivers, as it’s more expensive than a typical policy.