Many Canadians research insurance, seeking rates that are more affordable and offer better coverage than they currently have. While you may be able to cancel your insurance policy, did you ever ask yourself: Can your insurer cancel your policy? The short answer is yes, but with good reason. To help make sure you never get caught without insurance, here are the top reasons why your insurer can do so.
Most of the time, your insurer may cancel your policy if you pay your monthly premiums late or fail to pay them altogether. For various reasons, a payment may be missed. As a result, this issue should be taken care of quickly. If your provider contacts you or you notice the missed payment afterwards, please address the problem as soon as possible. Sometimes, when paying other bills or moving money between accounts, it can be easy to overlook a payment. A quick phone call to your isure broker can certainly help resolve the issue without coverage interruption. You’ll need to pay any overdue fees in addition to the outstanding balance. Even one late payment, intentional or unintentional, can cause your insurer to raise your rates or choose not to renew you.
Tips to avoid cancellation for non-payment:
- Pay the full annual premium upfront
- Set monthly payment reminders on your cellphone
- Set up auto payments from your bank account or credit card
- Ensure there is enough of a buffer in your account
- Change your withdrawal date to align it with your payday
- Ask isure to shop around and explore options to lower your costs
Did you know? Most insurance companies offer discounts of up to 10% for paying your premium in full each year.
2. Non-disclosure or misrepresentation (intentional or accidental)
The reasons insurers may cancel your policy can vary. The most serious issue is if you knowingly misrepresent your application to secure the policy or obtain a lower premium. Failing to be completely accurate when setting up your insurance is a serious issue. Misleading information can impact your coverage as a result. You state that your home will be your primary residence, but you intend to use it as a rental property instead, which can result in the cancellation of your home insurance. However, it is less of a concern if you mistakenly report the year your home has new windows installed as 2024, not 2022.
3. Not using insurance claim money to fix damages
When property damage happens, filing a claim is the next step. Once you file the claim, you are typically awarded money to cover the repairs. However, if you spend that money on something else, your insurer may cancel your insurance. In most cases, you need to provide proof that the repairs have been completed. You can send in photos of the repairs or offer contractor invoices. If an insurer finds out that you used the money for something unrelated or that you have submitted false invoices, they can cancel the policy entirely.
4. You’re no longer eligible under your existing policy
One way your home insurance can be cancelled is if your risks change. If your existing policy covers your home as your primary residence, but you decide to open a home-based business, you may be increasing your insurance risk. Operating a company, like an in-house daycare or a bed-and-breakfast, can dramatically change your liability. This can then mean you’re no longer eligible for coverage under your existing home insurance policy. To ensure you don’t unexpectedly find yourself without coverage, check with your insurer before implementing any entrepreneurial plans.
Did you know that not properly canceling your home insurance could impact your ability to secure a mortgage? Home insurance is a necessary financing condition, and in certain situations, you may not be able to get a mortgage if you can’t obtain home insurance.
5. Switching providers without notifying your insurer
If you decide to get home insurance somewhere else, it’s best to let your current provider know as soon as possible, especially before your policy renewal. Most insurers automatically renew policies for your protection so that there are no gaps in coverage. Although you are offered better rates elsewhere, the onus is on you to notify your insurer or insurance broker. You are still under contract until you inform them. Contact your provider immediately if you decide to cancel your policy or no longer require insurance. It is essential that once you speak to your insurer about cancelling, you request that the cancellation be confirmed in writing.
6. Your insurer decides not to renew your policy
Can your insurer cancel your policy if it stops servicing a particular region or offering a specific line of business? The answer is yes. This is called “no-renewal”, whereby the insurer will notify you that they are no longer offering a particular service. Insurance companies, at times, adjust their portfolios to serve their customers’ needs best and to be fiscally responsible to their shareholders. Fortunately, this one won’t leave a stain on your record, since it has nothing to do with negligence on your part.
7. Driving under the influence or reckless driving.
Being caught driving under the influence comes with a plethora of consequences, one of these being a voided insurance policy. If you are caught driving under the influence of alcohol or drugs at the time of an accident, your insurance company may deny your claim and cancel your coverage. Driving while under the influence also comes with many consequences, such as legal fees or jail time.
8. Negligent or reckless driving
Similar to driving under the influence, engaging in reckless or negligent driving behaviour, such as excessive speeding, can cause a void in your coverage. You can also get your policy cancelled for aggressive driving or participating in illegal street racing.
9. Unapproved use of a vehicle
If your policy is designated for personal use, using your vehicle for commercial purposes —such as driving for a rideshare company like Uber or Lyft —without notifying your insurer, can void or cancel your insurance policy.
10. Timeframe for cancellations/non-renewals
Your insurance provider cannot cancel your policy more than 60 days after it was purchased. Unless you fail to pay your premium, you have committed fraud and/or seriously misrepresented yourself in the application. If your provider does cancel your policy, there are specific timelines they’ll need to follow:
Cancellation
Your insurance company must send you written notice 15 days before cancelling or notifying you in person. According to your policy, they will send the notice by registered mail only to your most recent address. Your 15-day notice period begins the day after the letter is delivered to the post office.
Non-renewal
Your insurer will send a notice of non-renewal 30 days before the expiration date. In all cases, you only pay for the period during which your insurance policy was in force. The insurer will have to reimburse you for any overpayment of premiums.
Consequences of cancellations
- Trouble finding an insurer
- Premium increase
- Reduction in coverage
Ultimately, it is best always to be upfront and let your insurance provider or insurance broker know. We hope that we have answered the question, “Can your insurer cancel your policy?” that many of our clients have asked us before. However, many of the reasons insurers may cancel your policy can be easily avoided. Be sure to update them with any changes that may affect the risk quoted on your original policy. Contact one of our isure representatives when it’s time to renew your policy.
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