Bills can get ahead of anyone from time to time, and it can be a balancing act to maintain all obligations. Car insurance is unlike other bills. It’s necessary to legally operate your vehicle. If your policy gets cancelled for non-payment, you could be exposed to fines of $5,000 to $50,000 in Ontario. Insurance companies must follow a cancellation procedure, however, and can’t cancel your policy without notice.
Ending Your Own Policy
If you no longer require car insurance, contact your insurance company in writing prior to the last day you need coverage. Simply not paying your insurance isn’t advisable and has some negative effects down the road. Failure to pay without properly cancelling may make you a high risk driver in the eyes of the car insurance industry. In future, car insurance might be more difficult to obtain. Premiums will increase, and fewer insurers will issue policies to you.
Car Insurance Cancellation Notice
Under provincial regulations in Ontario, an insurance company can cancel a car insurance policy if the insured driver is in violation of company rules. The Financial Services Commission of Ontario reviews and approves these rules which the company proposes and then follows. Cancellation proceeds when a driver is in violation. Under the Insurance Act, the company gives 15 days notice of cancellation by registered mail. This period is five days, if the notice is delivered directly to the driver. The driver can pay the amounts owing and the insurance company can reinstate the policy. However, that choice remains with the insurer, and they are not obligated to rescind the cancellation. With no payment, the policy is cancelled.
Complications from Cancelled Car Insurance
Any interruption in car insurance history has costs. A continuous history of car insurance coverage, combined with a clean driving record, is the most crucial personal factor a driver carries to ensure low auto insurance premiums. When a drivers loses this, premiums are higher. Those insurance company rules may prevent a company from offering a policy, if non-payment is chronic or combined with other high risk factors. When a driver is still within another company’s rules, they may offer a policy, but at a much higher price due to the additional risk factor the driver now carries. In extreme situations, no insurance company in the regular insurance market may offer a policy.
Car Insurance Last Resort
The auto insurance industry in Canada can refuse a driver on a company to company basis, but it cannot refuse a driver as an industry. For this reason, the Facility Association came to be. An industry organization to which all insurers belong, it acts as a last resort for high risk drivers who remain legally entitled to drive. The Facility Association is not an underwriter of car insurance policies, but an organization that brokers deals between high risk drivers and insurance companies beyond the rules that restrict companies in the regular market. Besides drivers who are cancelled for non-payment, other clients of the Facility Association include those with modified high performance vehicles and drivers with major traffic convictions. While policies are offered through the Association, premiums can be astronomical, sometimes 4 or 5 times the cost of a regular policy.