We’ve written more than once about the complexities of car insurance. We know from experience that to the layperson, automotive insurance can be a challenging subject to fully understand. We’ve tried to outline that the key to reaching your goals with automotive insurance involves researching the relevant information.
That’s why today we’re going to continue our series of articles about the world of automotive insurance by talking about one of the most commonly misunderstood topics: cancelling car insurance. We’ll walk you through some of the factors you might not have been considering if you’re thinking of cancelling car insurance. We’ll explain how insurance coverage gaps affect your record, why renewal is an important time for you if you want to cancel your car insurance policy, and some of the options available to you when you’re ready to cancel. If you are wondering how to cancel car insurance without charges, keep reading. Another topic that is covered in more depth is how to switch insurance companies.
How to Cancel Car Insurance
Insurance Coverage Gaps
The first aspect we need to explain is the concept of insurance coverage gaps. Did you know that having gaps in your insurance coverage history can affect your rating, and potentially your premium?
The reason for this lies in the fact that insurers want clients who represent low-risk investments. If your record shows gaps in coverage, you might be perceived as being more high-risk. If possible you want there to be little to no empty space in your coverage history.
When you’re cancelling your car insurance, you should be keeping this in the forefront of your mind. The other reason you should be thinking about coverage gaps is due to the fact that some drivers incorrectly assume their coverage ends on a different date than it really does. If you’re cancelling one policy and replacing it with another, make sure there’s an overlap between the end of the first and the start of the second. If you don’t you could be driving uninsured, which is a very serious offense. If caught, your insurance rates will almost definitely be affected, to say nothing of the potential for tickets, fines, or other criminal prosecution.
Bonus — You can avoid insurance coverage gaps by opting to temporarily pause your car insurance instead. Click the link for more information.
Renewal: the Best Time to Cancel
We’ve explained some of the specifics of your automotive insurance policy renewal before here. The big takeaway from that article is that your renewal period is the best time to cancel your insurance policy. It’s one of the only times you can cancel your policy without incurring any additional charges.
In short, most insurance policies in Ontario happen on an annual basis. They also represent an annual chance to cancel your policy without facing additional charges. When you receive notice that your renewal period is approaching, you should remember that it’s the best time to more closely examine your insurance rate, because of the opportunity to change policies without penalty.
Cancelling during your Policy Period
Let’s say you don’t remember to cancel during your renewal period, or you feel that you can’t afford to wait until the next annual renewal. You need to make sure you understand all of the fees associated with cancelling your insurance. Different policies have different particulars relating to the possible fees you would have to pay, so make sure you understand them intimately before moving forward. You may be responsible for some portion of the remaining annual premium, plus a fee for early cancellation. There may even be other fees or penalties you’ll have to pay, depending on your circumstances.
Once again, the best way to cancel your automotive insurance policy without charges is to do it during your renewal period.
In spite of all this, you might still make the decision to cancel. If you do, try and work with your insurer. Explain your situation to them and ask them to explain all the costs of cancelling your policy now. Read also this post about what happens when your insurance is cancelled for non-payment.
A Financed Car
One topic we’re seeing come up has to do with financed vehicles. Financed vehicles often face some different challenges than others, and cancelling your insurance has extra considerations if you’re insuring a financed vehicle.
Almost all automotive finance agreements have a stipulation in them that prevents the vehicle from being uninsured. This is a form of protection for the company providing the cash for the vehicle. If something were to happen to the vehicle while it was uninsured, the value of the vehicle would become compromised.
To prevent that, you need to read your finance agreement carefully if you’re thinking of cancelling insurance on a financed vehicle. It’s usually not illegal to do so, but you could be facing massive penalties for breaking the terms of your finance agreement.
Reducing or Seeking Other Providers
As an alternative to cancelling your insurance, you can look at reducing your coverage, or seeking another provider.
With Covid-19 affecting our driving habits, many automotive insurance providers are used to drivers trying to get a little less coverage to reflect the fact that they’re driving less often. The first step we suggest is to reach out to your insurer and mention that you’re not driving as much if that’s the case.
Secondly, you could consider all the aspects of your coverage beyond the minimum mandatory components. If trimming some of your coverage and saving some money is a viable option, it could save you some money in the long run. This option is especially preferrable to cancelling at any other time besides your renewal period.
Another option is considering looking at another insurance company to get a new policy. If you’re considering that, Surex can help. We can steer you to the policy that works for you by connecting you with the top insurance companies in Canada. We offer personalized service through our team of top-notch insurance advisors.
We hope that you now know the specifics of how to cancel your insurance policy without penalty in Canada. Understand the inherent risk and costs associated with this idea is the first step towards reaching your goals. Give some thought to these factors, and make a plan to cancel your insurance without extra charges. Check also this post about getting car insurance after cancellation in Canada.
