Part of the requirements of owning a car in Canada is having car insurance, which is the law in all Canadian jurisdictions. However, there are situations when cancelling your car insurance is essential. For example, you might wish to switch insurance providers because you have a better deal with another provider, no longer own a car, or relocate to a new province.
If you’re cancelling your car insurance right now, it’s probably because your policy is about to expire. But did you know you can cancel your policy at any time?
Cancelling Your Car Insurance at Renewal
The opportunistic moment to make a change would be when it is time to renew. It’s an excellent time to compare car insurance rates or talk to your current insurer about new choices. It’s also the perfect time to update or cancel the insurance without incurring fees or charges.
Cancelling Your Car Insurance Mid-Policy
Cancelling car insurance in the middle of its term can result in penalties and other charges. When you buy car insurance, insurers want you to pay for an entire year, so you may be charged if you change your mind. Penalty fees vary and are at the insurance provider’s discretion.
Before making any final decisions, it’s usually a good idea to read the fine print of your insurance contract.
How do You Cancel Car Insurance?
Cancellation must get made correctly to avoid potential problems. Here are the necessary steps to take.
- Step One: Speak to your advisor about exploring price options with various insurers.
- Step Two: It is essential to let your current insurance provider know that you wish to cancel once your new insurance is ready. Again, sending your insurer a cancellation letter would be best as having a letter helps you keep track of the date of cancellation.
- Step Three: Ensure that there is no gap as you change and that your new policy has been activated. You should avoid driving without insurance if there is a gap. If you have an accident, you will face fines and severe punishments.
What to Consider Before You Cancel Your Car Insurance
Even if you find a better price or are dissatisfied with your current insurance provider, switching plans may not make sense if you consider the following:
- Cancellation Fees: You may have to deal with cancellation and administrative fees if you choose to cancel mid-term. These fees get determined by the terms and conditions of your contract.
- Administration Fees: You’ll have to pay an administration fee when starting a new policy, while a down payment may also be required. These upfront charges must be considered when choosing to move insurers and your cancellation penalties.
- Loss Of Current Discounts: When switching, one element that frequently gets ignored is your available discounts. You may lose loyalty discounts or other advantages and savings if you cancel.
Can You Cancel Car Insurance on a Financed Car?
Even though the government will officially accept it, your auto loan will not. Depreciation accounts for a significant portion of a car’s value which means your car will be worth less than what you owe in a year. In addition, if you have an accident, your insurance will pay the actual cash value, which won’t cover the car loan cost if the car is written-off. A gap cover may be an option to consider, only if you buy it when you lease the car.
If you have a broker and are uncertain about policy fine print or other legal terms, ask for their assistance. If you’re confident in your expertise, talk to your insurance company about methods to save money on your premiums.
And don’t forget to compare car insurance with our tool to find the perfect car insurance according to your needs.