Can I Cancel My Car Insurance Anytime?
Can I cancel my car insurance anytime?
Yes, you can cancel your car insurance policy at any time, whether you just bought the policy or it’s up for renewal. That said, if you still own and operate a car, you must have new car insurance in place before you cancel your old policy to avoid penalties for driving without insurance.
Car insurance is required by law in all Canadian provinces and territories for anyone who owns and operates a vehicle. You can check the Insurance Bureau of Canada (IBC) guide for mandatory insurance requirements in your province.
What happens if you cancel car insurance early?
If you cancel your car insurance before your policy renewal date, your insurance coverage will end on the date you choose. You may receive a refund for unused premiums if you paid in advance (e.g., an annual premium).
Cancellation penalties and refund methods vary by insurer and policy. Check the language on your policy documents or speak to an insurance representative to confirm any penalty fees you may be charged or refund you may be entitled to.
If you cancel early, you’ll be without car insurance unless you have another policy lined up to activate before the old policy is canceled. Driving without insurance is illegal in Canada and can lead to serious legal and financial penalties, so be sure to schedule your cancellation carefully when you switch insurance companies to avoid a coverage lapse.
Will you get a refund if you cancel car insurance?
If you cancel car insurance before your policy term ends, you should get a refund for unused premiums. Depending on the language in your policy agreement, you may receive either a pro-rated refund or a short-rate cancellation fee.
Pro-rated vs. short-rate cancellation
A pro-rated refund for car insurance returns all unused insurance premiums in full. For example, if you paid an annual premium in advance for a full year of coverage and canceled after one month, you’d receive a refund for 11 months of premiums, or about 91.6% of what you paid for the year.
A short-rate cancellation returns a refund for unused premiums, but deducts a cancellation fee from your refund to cover administrative costs associated with the cancellation request. The earlier in your policy term you cancel, the higher the short-rate cancellation fee.
Every insurance company in Canada uses their own short-rate cancellation table to calculate your refund and penalty based on when you canceled the policy.
A short-rate cancellation penalty is standard when you cancel your own policy voluntarily before the policy term is up. Pro-rated refunds are more common when your insurance company cancels your policy, such as for non-payment of premiums.
When does it make sense to cancel your car insurance?
Cancelling your car insurance makes sense if you no longer own a car or want to switch to a different insurance provider.
You may need to cancel your car insurance if:
- You’re selling your vehicle: Wait until the transaction is complete and you no longer own the vehicle to cancel your policy. You can cancel your insurance at the same time that you turn in your licence plates.
- You found a better rate elsewhere: Once your new policy is scheduled for activation and you’ve made your first payment, you can cancel your old policy.
Cancelling your policy to save money without buying new coverage never makes sense. This will cost you more in the long run thanks to the steep legal cost of driving uninsured.
When waiting to cancel could make sense
You can cancel your auto insurance at any time, but the best time to cancel is right before your policy is due to expire. It may make sense to wait before cancelling if:
- You just bought the policy: While you can cancel early in your policy term, you’ll pay the largest short-rate cancellation fee in this situation. Unless your need to cancel is urgent, waiting a few months could reduce your cancellation penalty.
- You have an open claim: You can still cancel your car insurance policy if you have an open claim, but it may be easier to resolve the claim first, especially if you’re trying to switch to another provider.
What if I’m putting my car in storage?
If you want to keep your vehicle but don’t plan to drive it for an extended period, you may be able to put most of your insurance coverage on pause using Ontario Policy Change Form (OPCF) 16 for Suspension of Coverage. OPCF 16 suspends liability, collision, and other coverage for vehicles that aren’t being driven for at least 45 days.
To qualify for OPCF 16, you must:
- Store your vehicle in a private, locked garage
- Store your vehicle full time for at least 45 days
- Get permission from your lender if your car is financed
Can you cancel car insurance if your home and car insurance are bundled?
Yes, you can still cancel your car insurance if your home and auto insurance are bundled with the same carrier.
When insurance policies are “bundled,” it just means that you’ve purchased multiple policies from the same insurance company. Cancelling one policy won’t cancel the other; however, if you cancel car insurance when it’s bundled with home insurance:
- You’ll lose any home insurance discount you received for bundling both products
- Your car insurance quotes elsewhere may be higher without a bundling discount
- You’ll lose administrative benefits, such as a streamlined claims process for incidents that damage your home and car simultaneously
How to cancel your car insurance
To cancel your car insurance, follow these steps.
- Review your policy’s cancellation terms: Are you eligible for a pro-rated or short-rate refund? What type of penalties, if any, apply to the cancellation?
- Get a replacement policy in place if you still own a vehicle: Wait to cancel until your new policy is paid for and scheduled.
- Request cancellation from your insurance broker or agent: You can send a written request or call your broker by phone to ask for cancellation. Be ready to provide your policy number.
- Confirm your cancellation date: Remember to schedule it no earlier than the same day your new coverage begins, if applicable.
Make sure that any new car insurance quotes have comparable coverage, deductibles, and exclusions before switching to a new insurance company. While coverage options are fairly consistent across carriers, the default package each company offers is a little different.
Working with a broker can help you ensure that you’re getting the same or better coverage when switching to a new company. When you request quotes with PolicyMe, you’ll have the opportunity to speak with a licensed insurance broker, who will review your quotes and options before helping you make the switch.
FAQ: Can I cancel my car insurance anytime?
This article is for general information only and is not insurance or legal advice. Examples and any sample quotes or rate ranges are illustrative and do not constitute an offer or guarantee of coverage, price, or eligibility. Actual coverage, discounts, and premiums depend on your individual circumstances and the insurer provider; if there is any discrepancy, your policy and insurer documentation govern. For advice about your situation, speak with one of our licensed insurance professionals.