If you’re fortunate, you might uncover a fantastic offer on a vehicle insurance plan that makes you desire coverage right away. What transpires, though, if you already hold a policy with another insurer? To receive better prices or coverage, you might think about canceling your current policy and transferring to a different carrier.
You’ve come to the right place if you’re wondering how to cancel your auto insurance without paying any fees or if you can get a refund after doing so. To learn more about canceling your auto insurance in Canada, keep reading our guide.
How Much Does It Cost to Cancel Car Insurance?
The cost of canceling car insurance in Ontario can vary depending on the insurance company and the terms of your policy. Typically, insurance companies will charge a fee for canceling your policy early, which can range from a few dollars to several hundred dollars.
Additionally, if you have already paid your insurance premium in advance, you may be entitled to a refund for the unused portion of your policy. However, this refund amount will also depend on the terms of your policy.
To get a specific answer to your question, you should contact your insurance provider directly and ask about the cost of canceling your car insurance policy in Ontario. They will be able to provide you with more information and a detailed breakdown of any fees or refunds that may apply.
On average, it can cost you 2% to 7% of your car insurance premium to cancel your policy before the renewal period. However, these charges can vary depending on the following factors:
- Any outstanding premium payments
- Non-refundable provider fees
- The time remaining on the term of your policy
Generally, the closer your cancellation date is to your renewal date, the lower the amount you pay in cancellation charges. Read the fine print to see what fees are incurred if you cancel before that date and what requirements you need to submit for your policy cancellation.
How to Cancel Your Car Insurance Policy
Planning to cancel your car insurance policy? Here are the steps that you need to follow:
- Provide the information about your policy for documentation: You will require both your policy number and private data, such as your birthdate. You will require your new policy number, the name of the provider, and the date the policy became effective if you are receiving coverage from a new insurer.
- Review your insurance, then let your insurer know: Verify your policy’s cancellation conditions because each provider will have a different procedure in place. Also, you must inform your auto insurance company of your choice. Avoid letting your coverage merely lapse without contacting them because this may impair your ability to obtain insurance in the future.
- If there is a specific protocol you must adhere to, ask your auto insurance company: Insurance companies could demand that you provide a letter of cancellation or submit specific paperwork during the notice period. Keep in mind these requirements, as well as the completion dates. Be aware that before your insurer can cancel your insurance, certain provinces demand a letter of cancellation from you.
- Inquire about any refunds or cancellation costs: Depending on when you cancel your insurance, certain providers charge various cancellation costs. Others will reimburse you for any previously paid premiums on a prorated basis.
- Contact your bank and cancel any automatic payments: If you have a car loan, you must inform the bank or lending institution that you are canceling your policy and switching to a new insurer. Call your bank and cancel any automatic payments. To prevent additional fees, make sure to stop any automatic bank withdrawals.
- Before the old policy is cancelled, make sure the new one is in effect: Make sure your new policy is in place prior to the cancellation of your old one to avoid having a coverage gap. If you get in an accident while driving without insurance, you may face fines and penalties.
- Get your cancellation notice: A copy of this warning should be kept for your records. Don’t accept verbal confirmation from a phone or in-person meeting as a precaution. Get proper written confirmation from your auto insurer.
Can I Get a Refund on My Car Insurance Policy?
Yes, you can get a refund on your car insurance policy if you pay your premiums annually. You’ll be refunded the amount for the months you paid in advance. However, if you pay your premiums monthly, you will have to pay a cancellation fee.
Companies will compute your refund either through short-rate cancellation or pro-rated cancellation. Here’s the difference between the two:
- Short-rate cancellation: You’ll receive part of your initial premium, but your car insurer will charge you a cancellation fee for cancelling your policy early. They may also deduct additional administrative fees.
- Pro-rated cancellation: You’ll receive a refund based on the remaining months you already paid for. E.g. if you paid for a year of coverage but cancelled four months before the renewal date, you’ll be refunded for that remaining time.
Can I Cancel My Car Insurance Without Incurring Charges?
Yes, you can cancel your car insurance without incurring extra charges by cancelling during your renewal period. It’s best to inform your insurer ahead of time that you’ll be cancelling your policy effective on the renewal date.
Whether you can cancel your car insurance without incurring charges also depends on the terms of your insurance policy and the insurance company you are with. Some insurance companies may allow you to cancel your policy without incurring any charges if you cancel within a certain timeframe, such as 14 days after the start of your policy. This is often referred to as a “cooling-off” period.
However, if you cancel your policy outside of the cooling-off period, you may be subject to fees or charges for early termination of your policy. These charges may include administrative fees, cancellation fees, or penalties for terminating your policy before the end of its term.
It’s important to carefully review the terms and conditions of your insurance policy to understand the cancellation process and any associated fees or charges. If you are unsure about the terms of your policy or have questions about canceling your car insurance, you should contact your insurance provider directly to discuss your options.
Can My Insurer Cancel My Car Insurance Policy?
If you’ve skipped payments, provided false information about your auto insurance coverage, or made payments after the due date, your insurance provider may be able to cancel your policy.
By timely paying for your policy, you can avoid difficulties. If you see that you’ve missed a payment or your insurance has reminded you about it, take care of it right away by paying. Keep in mind that some carriers will levy late penalties, while others might hike their prices or decide not to renew your policy when it expires.
Can I Cancel My Car Insurance Policy With an Open Claim?
Yes, you can terminate your auto insurance coverage even if a claim is still pending. But, keep in mind that you’ll still need to file the claim and that your insurer will require cancellation fees. You should also tell your new insurance company if you have a claim because it can effect the prices they are willing to provide. The cancellation of your new policy may result from failing to disclose your claim to your previous provider.
Common Reasons to Cancel an Existing Car Insurance Policy
These are the most common reasons why drivers cancel their car insurance policies, even if they have to pay cancellation charges:
- More affordable premiums: You may have found a good car insurer that offers lower rates for the same level of coverage.
- Discounts by bundling: A car and home insurer may be offering a good discount if you get them to insure both your house and your car. Alternatively, you may have decided to get a multi-car insurance policy with a spouse or family member because it results in cheaper premiums.
- No more car to cover: You may have decided that you don’t need a car anymore, so the policy is equally unnecessary.
- Poor customer service: You may simply be unsatisfied with the way your insurer handles claims, customer concerns, and queries.