Insurance cancellation, especially due to non-payment of premiums, can be frustrating and sometimes confusing. Can your insurance provider cancel your policy? Yes. In Ontario, missed car insurance payments can lead to policy cancellation, higher future premiums, and difficulty obtaining a monthly payment plan. Unfortunately, many policyholders are unaware of the many consequences this can have.
This guide will help you understand why car insurance can be cancelled in Ontario, what happens if you don’t pay your premium, and how to recover from a cancellation, especially one resulting from non-payment.
Can Insurance Companies Cancel Your Policy for Non-Payment?
Yes, car insurance policies in Ontario can be cancelled for non-sufficient funds (NSF). Whether you forget to make a payment, have insufficient funds in your account, or’ve changed banks and didn’t update your information, insurers take non-payment seriously. Unlike other bills (like your phone or internet), insurance cancelled for missed payment can have immediate legal and financial consequences.
Why Was My Car Insurance Policy Terminated?
Under Ontario law, insurance providers must give a reason for cancelling your auto insurance policy. Common reasons include:
1. Default Payment of Premiums
This is the most common reason for a car insurance cancellation. If you miss one or more payments, your insurer may terminate your policy after giving proper notice (usually 15 days by mail or five days in person).
2. Fraud or Misrepresentation
If your insurance provider discovers that you’ve misrepresented information on your application or filed a fraudulent claim, they can cancel your coverage.
3. Violation of Policy Terms
Using your car for prohibited purposes (such as ride-sharing without proper coverage) can result in cancellation.
4. Poor Driving Record
Excessive at-fault accidents, traffic violations, or claims can result in your insurer choosing not to renew your policy—or cancelling it altogether.
The Financial Services Regulatory Authority of Ontario (FSRA) requires insurance companies to give drivers a chance to fix missed or bounced payments (NSF payments) before cancelling a policy. While non-payment can still lead to cancellation and higher future insurance rates, it is generally not treated as severely as a conviction for driving without insurance.
What to Do After an Insurance Cancellation
- Find out the reason. Contact your insurer immediately to clarify the reason for the cancellation.
- Avoid driving. Driving without insurance is illegal in Ontario and can result in severe penalties.
- Seek new coverage. Reach out to a licensed broker like isure to get quotes from multiple insurers. Even if you’re classified as a high-risk driver, you still have options.
- Address payment issues. If the cancellation was due to non-payment, settle any outstanding balances and set up reminders or automated payments for the future.
Tip: Don’t ignore a cancellation notice. Delaying action can make it harder—and more expensive—to get reinsured.
In Ontario, it is the law that all drivers must carry insurance. If you drive without insurance, you risk major fines, licence suspensions, and possibly worse consequences. Consider public transit, cabs, or carpool services if they are available in your city. If unavailable, cost-prohibitive or unnecessary, you should consider a bicycle or even an e-bike.
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How Does Non-Payment Affect My Insurance Premium?
Yes, a non-payment or insurance cancellation will affect your car insurance rates. If you lose your car insurance due to non-payment, the impact is immediate. It doesn’t just result in the loss of coverage—it also affects your insurance record. Here’s how:
- Higher premiums: Drivers with a cancellation for non-payment are often considered higher risk. As a result, you may see your premiums increase significantly when applying for a new policy. In some cases, Ontario drivers may pay 20%–50% more after a cancellation, depending on their driving history and how recently the cancellation occurred.
- Policy flags: Insurance companies can see previous cancellations when reviewing your application. A cancellation for non-payment may raise concerns about financial reliability, even if your driving record is otherwise clean.
- Limited insurer options: Some standard insurance providers may decline coverage altogether after a cancellation. Drivers may need to seek coverage through high-risk or non-standard insurers, which typically offer fewer discounts and higher rates.
- Payment plan restrictions: After multiple missed payments or cancellations, insurers may refuse monthly payment plans and instead require the entire annual premium upfront. This can create a major financial barrier for many drivers.
- Additional fees and deposits: Some insurers may charge reinstatement fees, require larger down payments, or impose administrative charges after a cancellation due to insufficient funds (NSF) or bounced payments.
If you’ve had more than one insurance cancellation for non-payment, insurers may refuse to offer monthly plans and will prefer that you pay all at once. You also may be classified as a high-risk driver. High-risk insurance after cancellation can push you toward non-standard markets.
Steps to Reinstate Cancelled Insurance:
- Act Immediately: Contact your agent or insurance company as soon as you receive a cancellation notice (often sent via registered mail) to explore if reinstatement is possible, which is sometimes available within a 30-day grace period if the balance is resolved.
- Pay the Full Amount: Offer to pay all outstanding premiums immediately to show good faith.
- Request Reinstatement: Ask your provider to reinstate the policy rather than opening a new one to avoid higher premiums and a coverage gap.
- Use a Broker for Alternatives: If the original insurer refuses, contact a broker who can find specialty insurers that accept riskier profiles due to past cancellations.
- Be Prepared for Consequences: Note that a cancellation for non-payment remains on your insurance history for 3 years, which can lead to higher premiums.
Have a Cancelled Policy? Common Insurance Questions Answered
Can I reinstate a cancelled policy after non-payment?
Sometimes. If you act quickly (usually within 30 days), your insurer may allow you to reinstate your policy once the balance is settled. However, you may need to pay a reinstatement fee and provide updated banking information.
How long does a cancelled insurance stay on my record in Ontario?
A cancellation typically remains on your insurance record for three to six years, depending on the insurer. During this period, you may face higher premiums and limited payment options.
Will every insurer reject me if I have a non-payment on record?
No, but your choices will be more limited. Some insurers specialize in high-risk auto insurance, which may be your only option if you have multiple cancellations. Expect to pay higher premiums and possibly upfront.
What’s the difference between cancelling a policy and letting it lapse?
If you cancel a policy intentionally, by notifying your insurer and paying any outstanding fees, this is considered responsible. Letting a policy lapse due to non-payment is seen as a red flag and can severely impact your record.
Use our isure Cancellation Calculator to estimate how much you’ll owe if you cancel early.
Does cancelled insurance affect credit score?
In Ontario, auto insurance companies are generally not allowed to use your credit score to rate or underwrite your car insurance policy. However, a cancellation due to non-payment can still affect your insurance history and make it harder or more expensive to obtain coverage in the future.
Can I switch insurers after cancellation?
Yes. You can still switch insurers after a cancellation, but your options may be more limited. Some standard insurers may decline coverage, meaning you may need to work with a broker or high-risk insurer. Expect higher premiums if the cancellation was for non-payment.
How many missed payments before cancellation?
It varies by insurer, but in Ontario, many insurers will issue warning notices after missed or NSF payments. After repeated missed payments—often two within the same policy term—an insurer may move directly to cancellation on a future missed payment. Ontario regulations require notice periods before cancellation takes effect.
Will Ontario insurers see previous cancellations?
Yes. Previous cancellations for non-payment may appear on your AutoPlus insurance history report, which insurers use to assess risk and calculate premiums. This means future insurers will usually be aware of prior cancellations.
Is a lapse worse than cancelling voluntarily?
Yes. Voluntarily cancelling your policy properly—by notifying your insurer and paying any outstanding balance—is generally viewed much more favourably than allowing a policy to lapse due to non-payment. A lapse may signal financial risk or insurance instability to future insurers.
Can I cancel my car insurance early?
Yes, you can cancel your car insurance early. However, it’s not always advised. The best way to cancel your car insurance is to contact your insurer first. The worst thing you can do is stop paying. If you don’t pay, your insurance policy will be cancelled, but it will also be listed on your record. Instead, you will need to pay a small fee for each month you are cancelling early.
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Next Steps After a Policy Is Cancelled for Non‑Payment
Insurance cancellation for non‑payment in Ontario can be stressful and costly, but it’s not permanent. The most important step is to act immediately. Contact your insurer or a licensed Ontario insurance broker as soon as you receive a cancellation notice to avoid higher costs and limited coverage options. With the right guidance, you can regain coverage and move forward with confidence.
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