As many Canadians are aware, it’s illegal to drive a vehicle without insurance in every province and/or territory in Canada. Having misconceptions or uncertainties about cancelling your auto insurance policy is normal. There are several reasons you may also want to cancl your policy – may be you want to switch insurance insurers fro a better deal, or perhaps you no longer have a car. Whatever your reasons may be, we promise always to take your best interests to heart. Nonetheless, there are a few myths out there about cancelling your auto insurance that we should discuss. In this article, we explain why you may want to switch or cancel your insurance, and other considerations that should factor into your decision. We’re here to help debunk the 7 misconceptions about cancelling your auto insurance policy. And finally, we will lay out the proper facts around cancelling auto insurance.
If you’re switching insurers, make sure you have a new insurance policy in place before you cancel the old one. So be sure to get all your insurance quotes in plenty of time to do that. Also, make sure that you inform your new insurance provider when your previous insurance policy will expire. If you have an outstanding car loan or lease, you must also notify your lender that you’ve changed insurance companies.
Reasons people cancel their insurance
Many customers at one time or another have considered cancelling their insurance. There are several reasons for this, and here are some of the most common:
- Better options out there: After speaking with friends or family, you’ve discovered your premiums are significantly higher than theirs. While many factors go into determining your car insurance premiums, there is no harm in looking for a better deal.
- Dissatisfied with current rate: You aren’t happy with your current coverage or rate, and feel there is a more cost-effective option out there.
- You no longer have a vehicle: You’ve sold your car or completed your car lease and find you no longer need a vehicle or insurance.
- Bundling insurance: Combining your auto and home insurance policies together with your provider can save you money.
Is cancelling your auto insurance policy the best option?
If you’re looking to reduce the cost of your current coverage or want to make adjustments, then you will not necessarily need to cancel it first. Depending on what you want to change, an insurer may tell you to cancel your current policy and then take out a new one with different terms.
Some of the things you may be able to change without cancelling your policy include:
- Your coverage options and extras
- Your deductible
- Your vehicle
- Your covered modifications and accessories
Other times, your insurer may be willing to waive your cancellation fee if you’re only changing policies. If you want to upgrade from third party car insurance to comprehensive car insurance, an insurer may be happy to cancel your current policy and give you a new one without charging any fees.
7 Common misconceptions about cancelling your auto insurance
1. “I don’t want to pay the large cancellation fee!”
Most customers are afraid of what they don’t know about insurance, especially when cancelling their auto insurance before the next renewal date. Most have a fear of a large cancellation fee looming in the back of their minds and would rather sit out a more expensive policy than cancel and change mid-term. In addition, most don’t know that the closer you are to your renewal, the lower the cancellation fee will be. As well, most fees are not typically more than $500. Sometimes customers may even get a refund! Before you decide to cancel, speak with your isure broker for more information.
2. “I don’t want to pay the cancellation fee, so I’ll just wait until renewal to move over.”
As discussed above, the first thing a customer should do is find out how much it costs to cancel. If another company offers you a lower premium saving you hundreds or even a thousand dollars, why wait until renewal to start saving money? Take the cancellation fee and check it against the savings. If there are savings even after the cancellation fee, then you are still benefit ting. Put that extra money in your pocket now, and don’t wait. Rates can change at any time, and at renewal, that premium may not be available.
3. “Does it look bad if I cancel my insurance, and will I be penalized with worse rates?”
No, a customer may cancel their insurance at any time, subject, of course, to the cancellation fee. However, when an insurance company cancels your policy, you may face negative consequences when attempting to secure insurance again.
4. “Do I need to also cancel my registration?”
Yes. If you’ll no longer be driving your car, you should cancel your registration or transfer to the new owner if you’re selling it. Otherwise, your provincial service centre can suspend your licence for cancelling insurance on a car you’re still driving.
5. “It’s a tedious process to send in all of those forms again!”
One of the advantages of being an isure client is that we already have all of your documents and forms. Our insurance brokers will also make switching over to another insurance company as smooth as possible for you. In some cases, we can move you over to another one of our insurance companies with only a conversation.
6. “I can’t cancel my insurance right now because I have an open claim.”
You can cancel your auto insurance policy at any time, even if you have an open claim.
7. “I spoke to my isure broker and was given a better rate with another company. So, how do I know if cancelling my auto insurance is the right choice?”
If you are provided with a lower rate, it’s simply a matter of adding up the costs of cancelling early and the costs of the new policy and weighing them against the savings on the premiums. Calculate how much you will save over the policy term on premiums alone and subtract from the early cancellation costs. Switching insurance companies may be beneficial, you just need to weigh the pros and cons.
If you still come out ahead, then cancelling your auto insurance right away is the right choice. Start by using isure’s Cancellation Calculator. Contact your isure insurance broker, and they will be happy to guide you through the steps to cancel your existing policy and set up a new policy for an easy transition.