The short answer is yes, an insurance company can deny you coverage, but it’s an incomplete answer. The Financial Services Commission of Ontario, the overseer of insurance products for the province, posts the Auto Insurance Consumers’ Bill of Rights that covers both a consumer’s rights and responsibilities. Since car insurance is mandatory in Ontario, as it is in all provinces, while an insurance company can deny you insurance coverage, the car insurance industry as a whole cannot.
Auto Insurance Bill of Rights
Key provisions of the Bill of Rights regarding denial of insurance include:
- You have the right to purchase auto insurance coverage
- You have the right to be given written reasons if you have been denied auto insurance
- You have the right to keep your policy in place if you pay your premiums and meet the responsibilities
- You have the right to be informed in writing if your policy is not being renewed
As you can see, you can’t be denied insurance without receiving reasons why, in writing, nor can a company cancel or deny renewal without informing you why. On the flip side, you have certain responsibilities to maintain to assure you’re eligible to receive consideration of these rights. By purchasing car insurance, you implicitly agree to:
- Pay your premium in a timely manner
- Alert your insurer of changes in circumstances that might affect your insurance status, including accidents, even if you are not making a claim
- Update information at your insurer’s request
How Insurers Underwrite Your Policy
Every insurer uses its own underwriting rules and guidelines. These must be filed, reviewed, and approved by the FSCO before these can take effect, and, once in place, a company cannot use different rules or standards to deny you coverage.
Though rules vary by company, common rules that permit a company to deny coverage include:
- Drivers on a policy exceeding a certain number of traffic offense convictions or at-fault accidents
- Repeated policy cancellations due to non-payment
- A history of providing incorrect or incomplete information to insurers
There are some rules that insurance companies cannot use to deny someone insurance. Rules of this nature will not be approved by the FSCO and run contrary to the Insurance Act of Ontario. These include denials based on:
- Credit history
- Physical or mental disability
- Where you live
- Whether you are new to Canada or newly licensed to drive
Note, however, that the conditions of each of these rules may trigger increases in car insurance premiums.
Auto Insurance Claim Denial What Next?
The denied driver may have been refused auto insurance coverage by an insurance company or agent if they have been determined to be a “high risk” based on the company’s underwriting rules. However, in the province of Ontario, the Insurance industry must provide a basic insurance option for any legal, valid licensed driver.
There is the possibility of finding certain insurers that specialize in “non-standard” or “high risk” policies and provide different underwriting rules or A denied driver may turn to The Facility Association which is an insurance pool all insurance companies belong to and is known as an insurer of last resort when the insurance applicant has been denied auto insurance coverage from regular market sources. You can get more information on the Facility Association from The Insurance Bureau of Canada.
Reasons for Being Refused Car Insurance
There are many reasons an insurance company may deny someone coverage. An insurance company will assess the risk involved and the possibility that they may have to pay out to you and/or a third party in the event of a claim. Insurance companies base these decisions on immense data and statistics drawn from many factors. Each company adheres to its own underwriting rules and these rules must be filed with the FSCO.
Some examples of underwriting rules that may keep you from being covered are if you or members of your household have had numerous driving convictions or at-fault accidents if you have had previous insurance policy cancellations due to non-payment or other credit issues if you have provided incorrect or incomplete information in the past when applying for auto insurance coverage.
The insurance company must inform you in writing of which rule or rules it has applied to deny coverage. Insurance companies may not deny insurance to you for any of the following reasons, credit history, physical or mental disability, where you live or where you keep your vehicle, or whether you are a new driver or new to Canada.