When buying a home, you’re making one of the most significant investments in your life. With this investment comes many recurring costs, such as home insurance. Home insurance not only protects you from substantial financial losses, but it’s also mandatory by most mortgage lenders in Canada. However, there are times when cancelling your home insurance and switching providers makes sense.
Read further if you’re considering cancelling your homeowner’s insurance and need the details required to make the cancelling process as simple as possible.
Why You May Want to Cancel Your Home Insurance
Let’s look at some of the reasons why you might want to cancel your home insurance policy. Some of the most common grounds for cancellation include, but are not limited to:
- You are moving: If you’re moving, you will need to find coverage applicable to your new home and may need to cancel your current insurance provider for one that offers better rates and more coverage at your new address.
- You have paid off your mortgage: Home insurance is only required if you have a mortgage on your home, so you can cancel after you’ve paid off your mortgage. However, living without home insurance is not always a wise option, as unexpected weather and damages can still occur.
- Your insurance rates increase: You could end up paying a lot more for your insurance coverage over time if the housing market or your provider’s policies change. As a result, several homeowners are inclined to cancel their policies, while others will switch providers when this occurs.
- You have chosen to rent instead: Home insurance is not required if you rent instead of owning a home. In this case, you can apply for renters insurance which provides similar benefits as home insurance but without the same level of coverage.
When Can Your Home Insurance Be Cancelled?
Your home insurance can be cancelled anytime you want, but you will need to ensure you have read and understood your insurance provider’s cancellation policy. Take note of the following when reading the terms of your insurance policy contract:
- You’re in the middle of a contract: You can cancel your insurance before the renewal or expiration date if you are unhappy with it or if you are moving. However, keep in mind that breaking your contract may result in a penalty.
- When your contract is about to expire/up for renewal: This is the best time to cancel your home insurance policy, as there won’t be any penalties charged.
- During your rescission right: Also known as your policy’s grace period, insurance providers are obligated by law to allow you to cancel your policy during this time without penalty (usually between the first 10 to 15 days of your policy)
How to Cancel Your Home Insurance
Follow these steps to get your home insurance cancelled:
- If your insurance policy is close to renewal, you will receive a notice from your insurance provider informing you of your policy expiration date. This notice will get sent to you at least 30 days before expiry.
- Contact your insurance provider telephonically or in person. Get information about what they require to cancel the policy, what fees are involved, and what contract terms you may violate.
- Inform your insurer that you will be cancelling your policy. Some providers may require a cancellation letter from you. It’s essential that you also write down the date of your cancellation.
- Ask your insurance provider to refund you for the difference if you paid your premium in full for the year.
- If you’re satisfied with the repercussions of the cancellation, get your cancellation confirmed in writing to make the transaction official and retain records.
- Compare insurance quotes and choose a new provider. Because this can be a timeous process, get your research done before cancelling your coverage.
You mustn’t cancel your home insurance unless you’re selling your home or moving to another insurance provider (compare home insurance with our tool for that). This is because you could have severe issues with your mortgage lender, and a disaster such as a fire can be financially catastrophic, leaving you insolvent and homeless.