You have to have car insurance to drive, but does your car insurance have to cover you? Not always.
Your auto insurance policy is a contract, and like any contract both parties need to agree to certain terms in order for the contract to remain valid. If these terms are not met, your insurance provider may not—and most likely won’t—pay out.
Here are seven situations where your insurance company may refuse to pay for losses or damages in the event of a claim.
1) Non-Disclosure or Misrepresentation
If you are not truthful when applying for auto insurance and your insurer finds out, then you could see increases to your auto insurance premiums or it could void your policy entirely, meaning you would not have protection in the event of a claim. What would be considered non-disclosure or misrepresentation? Well, not telling your insurer that you use your car to deliver pizzas would count, as would not listing drivers who regularly use your car.
2) Insurance fraud
If you commit insurance fraud like lying about the way a loss occurred, filing fraudulent claims, receiving payments for treatments that were not received, or including previous damages in an insurance claim—your claim will be denied and your policy could be cancelled. If this is on your record it may be difficult to secure auto insurance from another provider.
3) Failing to report car modifications
Modifying a vehicle potentially increases risk from an insurance company’s perspective. Some modifications may make a vehicle more susceptible to theft, while others improve a vehicle’s performance typically to make a car go above and beyond what it was designed to do. An insurer can refuse to pay a claim if you have not disclosed vehicle modifications leaving you out of pocket and potentially without coverage.
4) Driving under the influence
If alcohol or substance use is found to have played a role in a collision, whether you were driving or someone else was driving your vehicle with your permission, your insurer may deny payment for loss or damages caused to your vehicle.
5) Illegal activities and convictions
Additionally, if, as a result of a collision, you are convicted under the Criminal Code for any of the below offences or any similar law in Canada or the United States it is unlikely your insurer will pay out:
- Causing bodily harm by criminal negligence dangerous operation of motor vehicles
- Failure to stop at the scene of an accident
- Refusal to comply with demand for breath sample
- Causing bodily harm during operation of vehicle while impaired or over 80 mg of alcohol in the blood, or
- Operating a motor vehicle while disqualified from doing so
Basically, if you are using your vehicle in any fashion or for any purpose that is against the law, your insurance provider may not cover your damages if you were to get into a collision. This includes permitting your vehicle be used in a race, speed test or other illegal activity, driving the automobile while not authorized by law, or allowing someone else to operate your vehicle under any of these conditions. All of these exclusions are outlined in the automobile policy you received when you purchased your policy.
6) Failing to pay your premiums
Missing payments can default your insurance. If you are going to miss or be late on a payment, be sure to talk to your insurance provider first to prevent a non-payment cancellation. It’s just another example of how being honest with your auto insurance provider can help ensure your coverage is still there when you need it most.
What To Do If Your Policy Is Cancelled For Non-Payment
An insurance provider can cancel your policy for non-payment. Typically, what will happen is if you miss a payment, you’ll be sent a registered letter that gives you a certain number of days to pay the arrears (plus, potentially, an administration fee.) If you pay what is owed on time, then your policy will stay in force. Of course, there’s a limit to how many times this can happen. In Ontario, for example, your insurance provider will only allow for two instances of late payment (that results in them having to send a notice). The third time, the notice you’ll receive will be to inform you that your policy is going to be cancelled.
If your policy is cancelled, you won’t be able to drive until you’re able to get car insurance coverage. You can’t drive on the roads without it. You will be able to get car insurance, however, it will likely be more expensive with a cancellation on your record, and you may have to pay your premium upfront.
7) Using your personal vehicle as a taxi
With services like UberX now available in parts of Canada, some drivers are using their personal vehicle as a taxi without having commercial auto insurance. With commercial auto insurance, drivers and their occupants would be covered, however, it’s currently possible—with just your personal insurance—you may not be properly insured. If you’re entertaining the idea of joining a ride-sharing program to make some money on the side, make sure you talk to your insurance provider otherwise you may find you don’t have the coverage you thought you did.