It is mandatory for every motorist to have an active car insurance policy in Canada. The consequences for not having insurance while driving can be terrible, to say the least. When you buy car insurance then it is an agreement between you and the insurance company. If you fail to fulfill any part of your obligations as a policyholder then the insurer may take actions that may affect your coverage. Sometimes an insurance company may decide not to renew your policy and send you a notice. Or, it could even happen midterm due to any other reasons; for example, an impaired driving conviction.
Can An Insurance Company Cancel My Policy
As per FSCO, an insurance company may cancel an insurance policy due to various reasons. If it has been less than 60 days since the effective date of the policy then they may terminate the policy only for a specific reason as per their filing with FSCO. When it has been more than 60 days since the start of the policy then the insurer may cancel for the following reasons only.
- Premium non-payment
- Falsification of vehicle details
- Non- disclosure of information on the application
- Change in the risk
Reasons Why Your Car Insurance Company May Cancel Your Policy
Your car insurance company will notify you of the reason for canceling your policy before they do so. Some of the common reasons for car insurance to cancel the contract are as follows:
When you sign up for a car insurance contract then you have a responsibility to pay your premiums on time as per your agreement. If you do not pay on time and make it a habit of missing your payments then your insurer may not be happy. They could cancel your policy if you don’t pay as per their regulation from FSCO. So, if you feel that you are facing financial issues and cannot afford your policy then speak to your insurer. After looking at your insurance history and other records they may help you by arranging an alternative payment option. This way you do not have a gap in coverage.
Too many claims during a short period of time may bring you under your car insurer’s underwriting radar. They may disapprove that you seem to be filing claims too often and may consider you a high-risk driver. As a result, looking at your policy and all other factors, they may cancel your policy.
When you drive recklessly or impaired and get a ticket or a conviction, your insurer will find out. You may not hide convictions as they go on your records and your license could also be suspended. Every insurer has a threshold for tolerating the maximum number of convictions allowed in a period of, say, 3 years. Then they decide whether it is worth offering you coverage if your driving habits do not change for the better. It may also depend on how severe was the reason for your conviction; such as a DUI.
Change in Risk
Whenever there is any change in the risk related to your car, location, status, or any other material changes, you have to inform your insurer. If you suddenly decide to use your sedan for pizza delivery, then you must notify your insurer. They may add an endorsement or you may have to purchase a commercial policy. When you modify your car and that increases its value you must inform your insurer. Your insurer may cancel your policy if you hide any changes in your situation that could affect the policy. This is a breach of the insurance agreement.
Too many faulty collisions in too little time could surely ring the alarms for the insurance company. When a driver has many at-fault collisions then it might signal carelessness and high-risk.
If your driving license is not valid then that is a reason for your insurance company to cancel your policy.
Any kind of false information on the policy application or misleading details during a claim could cause the insurer to terminate your policy. If your falsification of details is a part of insurance fraud then you may face serious consequences. This could include jail time, conviction, and/or a heavy penalty.
What Is The Cancellation Procedure For An Insurance Company?
The insurance company has to send a written notice of 15 days or notify in person before they cancel the policy. When they send a written notice they should send it by registered mail only to the last address as per your policy. The 15 days of notice period begins the day after that letter arrives at the post office for delivery. They also prorate the premiums and will charge you for the duration of active coverage. Also, as per your insurance certificate, there is a minimum premium that they will not refund. In case you paid more they may refund the difference when they notify you of a cancellation. There could be a delay in the refund if there are any pending reports or other issues with your contract.
What Happens If My Car Insurance Is Cancelled
When your insurer cancels your policy then you have no coverage effective from the date of cancellation. If you have a collision then your insurance company has no obligation to cover you since the policy is inactive. In such a situation, the expenses related to legal issues and injuries could be devastating. You may even lose most of your assets if the court decides to attach them for meeting the expenses.
You may start shopping for new car insurance if you intend to drive and if your license is valid. To get another policy after your insurer cancels your policy is no easy task and also depends on the reason for cancellation. You may pay exorbitant premiums to the new insurer. If no insurer offers you cover then you may approach the Facility Association, again you would end up paying high premiums.