Driving isn't a right; it's a privilege that we have to respect and appreciate. Failing to respect the rules of the road can lead to this privilege being taken away from you.
The same goes for car insurance in Canada — if you don't follow the rules and make timely payments, you may have to deal with a handful of consequences. This leads to the question, "can an insurance company cancel your policy in Canada?" and if so, does the carrier need to provide notice?
Continue reading to learn more about getting your car insurance policy cancelled in Canada.
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Can your car insurance provider cancel your policy in Canada?
In short, yes, your car insurance provider does have the right to cancel your policy under certain circumstances. However, it's important to note that the reasons that a company can cancel your coverage are influenced by the policy start date.
For instance, policyholders in Ontario that have been with an insurance company for less than 60 days can only be dropped by their carrier if there are filing issues with FSCO (short for Financial Services Commission of Ontario).
On the other hand, if you've been with your car insurance provider for upwards of 60 days, then they have the right to drop your coverage for numerous reasons (more on these reasons below).
Cancel insurance policy in Canada — why would your carrier drop your coverage?
Some of the primary reasons that a carrier may decide to drop your policy include the following:
- Insufficient funds
- A high number of claims
- Convictions
- Increased risk level
- Providing your carrier with false information
Insufficient funds
As mentioned above, drivers are responsible for paying for their coverage promptly. Failing to make these payments on time can eventually force your carrier to drop your policy.
A high number of claims
Car insurance providers encourage drivers to submit a claim when they get into an accident or if their vehicle is damaged by a risk or peril (insurance jargon for an unforeseeable accident, like a natural disaster).
But, if you make a substantial number of claims, your provider may see this as a red flag. Making a large number of frivolous claims costs your provider time and money. So, if they feel like you're too much of a financial burden, they may be forced to drop your policy.
Convictions
Most car insurance providers give drivers some leeway for on-road convictions. However, if you get multiple convictions within three years (for instance, several DUIs), your provider may decide to cancel your policy.
Increased risk level
If you're about to make a drastic lifestyle or career change, you may want to notify your car insurance provider. Doing this allows them to make any necessary changes to your policy. For instance, if you decide to pick up a part-time delivery job, you'll need to let your provider know beforehand. Failing to inform your provider doesn't look good on your end and under certain circumstances, can lead to policy cancellation.
Providing your carrier with false information
Although it's relatively uncommon, some drivers in Canada will misinform their car insurance providers in an attempt to lower their rates. If you're caught providing your car insurance carrier with false or misleading information, you can not only lose your coverage, but you may also end up in jail or with a hefty fine.
Can an insurance company cancel your policy without notice in Canada?
No, insurance companies in Canada need to give policyholders a minimum of 15 days' notice before cancelling their coverage. In some cases, your car insurance provider may give you more time to cover any back payments or deal with the issue resulting in the cancellation (this is at the carrier's discretion).
If your carrier decides to drop your policy, they will notify you via an insurance cancellation letter.
Do car insurance companies need to follow up with their policyholders?
Technically, no, if you receive an insurance cancellation letter Canada car insurance providers do not have to take any further steps.
What does this mean? In Canada, your car insurance provider does not need to ensure that you've actually read the letter. Your provider has fulfilled their responsibilities by simply sending out the letter to your residence.
Here's a real-life example that should help clear things up:
In the case of Singh vs. Sangha, the Plaintiff failed to pay for their car insurance from July to September 2008.
In September, the Plaintiff's car insurance provider sent a letter requesting payment by October, 2008, stating that they would otherwise nullify the coverage. The Plaintiff was not home when the letter arrived and chose not to pick up the letter from a local post office. A few months later, the Plaintiff gets hit by an oncoming vehicle in a parking lot.
After undertaking legal action, the Canadian court found that the insurance provider did their due diligence in notifying the Plaintiff about the cancellation. The Plaintiff could have avoided the cancellation if they picked up the letter from the local post office and promptly paid for their coverage. In turn, the court dismissed the claim, and the Plaintiff didn't receive financial coverage from their provider for the accident.
Work with your provider to avoid getting your policy cancelled in Canada
We assume that you, like most drivers, value the freedom that it provides you. However, if you don't follow the rules and requirements set by your car insurance provider, you may lose the ability to drive. Thankfully, you can avoid this by making sure that you make payments on time, avoid making too many claims and do your best to stay safe on the road.
