Car insurance is a legal requirement in Canada for a reason. It provides financial protection against accidents, theft and liability. It also ensures that drivers can cover damages and medical expenses resulting from car-related incidents.
But sometimes life gets in the way and you forget to make a car insurance payment on time. How does this affect your protection?
Missed Car Insurance Payments at a Glance
- A cancellation for non-payment can label you as a high-risk client in the eyes of insurers. This may lead to higher premiums or difficulty obtaining new coverage.
- Driving without car insurance can result in serious penalties.
- To prevent future missed payments, consider enrolling in automatic payments. Auto-pay ensures your premiums are deducted from your bank account or charged to your credit card on the due date.
Missing a car insurance payment doesn't just affect your present coverage. It can also affect your future rates if your policy is cancelled.
Consequences of Missing a Car Insurance Payment in Canada
When you miss a car insurance payment, the consequences can vary depending on your policy's terms and conditions.
- Notice of missed payment: Your insurer may send you a notice stating how much you owe, when payment is due and when your policy will be cancelled if you don't pay.
- Payment deadline: Follow the deadline and payment method in the notice. In Ontario, the current Ontario Automobile Policy generally allows a policy to remain in force after a first or second notice if the required payment and fee are received on time.
- Late fees: If you miss a payment, your insurer may charge a late or administration fee. This increases the amount you need to pay.
- Policy cancellation: If the missed payment remains unpaid, your insurer may cancel your policy. This cancellation will lead to a lapse in coverage, which can have serious implications for your ability to drive legally.
How to Make Sure I Don't Accidentally Miss a Payment in the Future
Life happens, and it's all too easy to overlook your car insurance payments. Here are a few simple tricks to make sure you never miss another payment and your policy stays in force:
Set Up Auto-Pay
This is the easiest fix. Most car insurance companies let you set up automatic payments through your bank account or credit card. Once it's set up, you're good to go. Just keep an eye on your account to make sure there's enough cash to cover the payment.
Get Payment Reminders
If you prefer to pay manually, set a reminder for yourself. Use your phone, email or even a sticky note on the fridge—whatever works for you. Give yourself a heads-up a few days before the due date so it doesn't sneak up on you.
Time Insurance Payments With Your Payday
If you're paid biweekly, line up your insurance payment to come out right after payday. That way, you know the money is there and you're not scrambling to figure it out later. Ask your insurance company if the payment date can be changed.
Update Your Contact Information
Make sure your insurance company has the right email address, phone number and mailing address for you. It might seem small, but if reminders are going to an old address, that's an easy problem to fix.
Keep a Little Backup Fund
Sometimes an unexpected bill will come up or your car will need a pricey repair. Keeping a small amount as a buffer in your bank account can help you stay covered, even when things get tight.
Double-Check Your Payment Details
If your payment is set up through a credit card or bank account, make sure your details are current. Cards expire and accounts change—and those little hiccups can lead to missed payments if you're not careful. Update your insurer as soon as anything changes.
Resolving the Issue Step by Step
Sometimes, your insurance payment slips your mind or doesn't go through with your credit card or bank account. If you realize you've missed a car insurance payment, here's what you can do:
- Contact your insurer immediately: Reach out to your insurance company as soon as possible. Explain the situation and ask what you need to do to avoid cancellation.
- Check the payment deadline: Read the notice and find out how long you have to make the payment. If you can still prevent cancellation, pay the amount as soon as possible.
- Ask about payment plans: If you're facing financial difficulties that prevent immediate payment, ask whether your insurer can set up a more manageable payment plan.
- Check for late fees: Be aware of any fees that may apply and include them when making the overdue payment.
- Confirm the result: Ask the insurer to confirm whether your policy remains in force and when the next payment is due.
If your policy has already been cancelled, don't drive until replacement coverage is confirmed.
What Steps Should I Take to Get Auto Insurance After My Policy Was Cancelled?
Securing a new auto insurance policy after your previous one was cancelled for non-payment can be challenging. But you can still get coverage by being upfront about your policy history, shopping around and looking at high-risk insurance options.
Read More: Getting Car Insurance After Cancellation in Ontario
Bottom Line
- When seeking new car insurance after a cancellation, be honest about your history and explore all available options.
- Communicate with your insurer as soon as you realize you've missed a payment. Ask what options are available.
- Review your car insurance coverage regularly to make sure it still meets your needs and budget.
Read More: Consequences of a Lapse in Car Insurance