Canadians have undergone significant changes over the past few years. Most of us were sent home to work during the pandemic, and many chose to stay home to reduce their commutes. With shorter travel times, you may be wondering whether you still need a car as much as before. It’s important to continually explore your options before considering cancelling your insurance. Be sure to weigh up your situation carefully, and work with your isure broker to get a better understanding of your options. Both will help you by explaining savings options to reduce your expenses. If you decide to cancel your car insurance policy, you can use the steps below to do so successfully. In addition, we provide answers to common questions about cancelling your insurance.
Steps to Cancel Your Car Insurance
If you call your insurer or broker to cancel your policy, the cancellation can be effective immediately or on a future date, depending on your request and the insurer’s procedures. Make sure you request confirmation and written notice to avoid future fees or complications. They also recommend following these six steps to cancel your policy:
- Call your insurance company: Let them know you want to cancel. Otherwise, you might keep getting bills in the mail.
- Ask about cancellation requirements: Talk to an isure broker to find out the proper steps. While the process of cancelling varies by company, most require you to provide an insurance cancellation letter.
If you are switching insurers, it is always a good idea to provide them with a cancellation letter, even if they do not require one. It is helpful to have a record of the date you request cancellation.
- Ask about fees and refunds: Some companies offer prorated refunds on paid premiums, while a few charge a cancellation fee. Please read our blog to learn more about short-rate and pro-rated cancellations.
- Let your bank know: If you have a car loan or lease, you may need to inform your lender if they are listed as a loss payee on the policy.
- Cancel automatic payments: While your insurer should stop automatic premium withdrawals after they process your cancellation, you can also cancel payments from your account just to be sure you don’t get hit with any extra charges.
- Have your new insurance ready: If you intend to continue driving your car, have your new policy in place before cancelling to avoid a lapse in coverage.
Insurance Cancellation: Important Note
Ensure there is no gap in your insurance coverage when switching insurers. The last thing you want to find out is that your new one isn’t active yet. If there is a gap, you should never drive without insurance. If caught, you face fines and other severe penalties if you are involved in an accident.
What Information Do I Need to Cancel My Policy?
- Policy number
- Personal information, including name and date of birth
- Your new insurance details, including provider, policy number and effective date
- Proof of plate forfeiture or bill of sale if you’re getting rid of your car
Read our blog to learn more about common misconceptions around cancelling your insurance policy.
How to Cancel Your Car Insurance Policy
The first step in cancelling your car insurance is to contact your isure broker or insurer. If you cancel your car insurance before your policy starts, any premium paid is typically refunded, although some insurers may retain an administrative fee. If you are past the start date of your policy, your insurance company will charge you for every day your car was insured (or ‘time on risk’), plus an admin fee.
What to Expect When Cancelling Your Car Insurance
What about when you want to sell your car, but you’re only halfway through your car insurance policy’s year-long coverage? Can you get your money back if you paid for your protection upfront?
The good news is yes. However, your insurer is entitled to cancellation fees. A refund of premiums for midterm policy cancellations is often calculated on a short-rate basis when initiated by the policyholder. In contrast, prorated refunds may apply in certain situations, such as insurer-initiated cancellations. This will vary depending on how much has been paid in advance and how long the car insurance policy is active.
If I’m Selling My Car, When Should I Cancel My Car Insurance?
If you’re selling your car and not replacing it, you should cancel your insurance effective the date of sale. Don’t cancel your policy before the sale, as if damage occurs and isn’t repaired, the buyer will likely not proceed. Also, you cannot transfer your car insurance to the new owner. They will need to arrange their policy to take effect on the date they buy the car.
What Happens if I’m Replacing My Car?
If you’re going to replace your old car, most insurance brokers and insurers will update your policy to cover the new vehicle. This means you don’t have to cancel your current policy and purchase a new one.
Changing the policy may result in an additional premium to reflect any increased risk or cost associated with your new car. However, this is likely cheaper than cancelling and taking out a new policy. Please make sure you calculate costs and compare all options before deciding. You can use our Cancellation Calculator for help.
Can I Cancel My Car Insurance if I’ve Made a Claim?
You can cancel your car insurance, even if you have a claim on the policy. However, it’s required to pay the total policy premium through the cancellation date, plus an additional fee (if applicable). Just to remind you, a claim can affect your new policy, so it is essential to disclose ALL claims on your new car insurance application. You do not want a surprise higher car insurance rate than your quote, or, worse, being cancelled for non-disclosure by your new insurer.
Can I Cancel if I Pay for my Insurance Monthly?
With car insurance, many people choose to spread the cost by paying monthly. However, merely cancelling payment through your bank account or credit card doesn’t mean your car insurance policy is as well. Inform your isure broker or broker that you want to cancel, and obtain written confirmation from them; otherwise. They might chase you for premium payments that you still owe. You also risk a claim appearing on your credit history, so make sure you are fully paid up with your car insurance company before you cancel.
What if My Insurer Cancels My Insurance?
Sometimes, insurance companies may cancel your car insurance policy. Cancellation can occur before your renewal (known as a ‘non-renewal’). These occur because you no longer qualify for an insurance company due to tickets, claims, the vehicles, or their use. You may now find yourself in the high-risk car insurance market. A high-risk auto insurance specialist can help you. If your record improves, you may find that you are non-renewed by a high-risk insurance company, and will need to arrange coverage through a standard car insurance company.
Don’t Assume: Get Professional Advice from our isure Brokers
Take the time to calculate before you cancel any policy. You never know when it might be better to wait until the insurance is up for renewal. It is essential to review your policy annually to ensure you have the best possible coverage.
Navigating Ontario car insurance can be challenging. Limiting yourself to one insurer, not having all the facts or not understanding your options will end up costing you money. That’s why it’s crucial to have an independent insurance broker like isure at your side!
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