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Continuous Coverage: The Importance of Keeping Your Insurance Current

June 11, 2012

Car insurance is required by law across Canada, so most people are careful about keeping it in force at all times. Still, sometimes things happen: you forget to make your payment, change bank accounts and miss an automatic payment – and find yourself with a cancellation notice in hand. Even when it’s an honest mistake, there are a number of ways a lapse in your coverage could hurt you, both now and in the future.

Shopping Around for Car Insurance

If you find that you are having trouble paying your bill, you may decide to shop around to see if you can get a better rate. Be sure to start this process before you miss payments and definitely before you are cancelled.

While a missed payment on your current policy probably won’t fall under the new company’s radar, they will want to know how long you have had continuous coverage. A current or past cancellation puts a gap in that coverage, which may have an impact on the rates the company can offer you.

The worst thing you can do is to wait until you are cancelled to seek out a better rate. Shop around for car insurance quotes while you are still current, and take advantage of the lower rates your good insurance record can get you.

Some insurance companies won’t take on someone who has been cancelled for non-payment, while others will treat them as a driver who does not have previous insurance, thus offering higher rates.

Missing a Payment

If you are on a monthly plan, you may occasionally miss a payment or pay it late. Depending on your circumstances, this likely isn’t a problem as long as you pay it as soon as you realize the error and don’t go into a second month. Many insurance companies bill out a month in advance. This means that each bill you pay is for the following one, not the current one. You usually have a little leeway in your payments that prevents one missed payment from leaving you uninsured.

Missing more than one payment or failing to pay a bill that is due in full on time can potentially have bigger consequences. You may receive a cancellation notice. A cancellation notice is sent by registered mail. According to the policy conditions in Ontario and most of the country, the insurance company will cancel your policy effective on the 15th day after they give you notice. If you receive a registered letter of cancellation, you must pay what is owed within those 15 days otherwise you policy will be cancelled.

Cancellation of Your Policy

If your policy is actually cancelled for non-payment, you are uninsured as of the date the cancellation is effective. If you have an accident after your policy is cancelled your insurance company is under no obligation to provide you with coverage. You will be completely responsible for any financial obligations, including all property damage and injuries.

If you have been cancelled for non-payment, you can usually be reinstated easily by paying what you owe within the 15 days allowed.

Avoiding cancellation is the best policy; as soon as you receive notice of a missed payment, you should bring it current. If you are having trouble paying your bills, it’s best to talk to your agent about how to reduce the premiums before a payment is missed.

The Cost of Cancellation

In most cases a missed payment will cost you only a late fee at most, as long as you pay it right away. If you pick up a new insurance policy before paying it, remember that you will still have to pay what is owed for the time you were covered. This is called earned premium. The insurance company can bill you for each day you were covered without paying.

This means that you can’t simply move on and leave the unpaid bill behind. Unpaid bills that go to a collection agency will soon catch up with you in another way: on your credit. This in turn can even affect your insurance rates down the line.

Of course, the worst possible case is to be involved in an at-fault accident while uninsured. But there are other risks as well. If you are unable to prove you have current coverage to law enforcement when asked, you could face a violation and fine – and that ticket will cost you on your premiums as well.

Keeping your insurance current and continuous is simply a good idea at all times. Don’t miss payments; shop around early if you need a better rate. And whatever you do, don’t drive while your insurance is not in force.

  • Anonymous

    Do I buy food for my family to keep them alive a extra month or do I pay for car insurance only to get shafted in the end?

  • why?

    TD insurance cancelled my policy for “non-payment”(automatic withdraw) I paid the next day and got a policy termination letter no warning or anything. my rates went from $1200 a year for 2 cars to quotes of over $6000 a year I asked TD if I could pay the year up front and they said they could at $4500 a year. I had no convictions. This is HWY robbery!! IF WE ARE FORCED BY LAW TO HAVE INSURANCE THE FED AND PROV GOV SHOULD BE ENSURING THINGS LIKE THIS DON’T HAPPEN. What happened to me is fraud!! someone has been or is being paid off to allow this to happen to innocent Canadians.

  • http://www.insurancehotline.com/ InsuranceHotline.com

    Hello Why,

    I am sorry but we can’t comment on why your premium was increased as each insurance company has their own rules. If you feel that you are being charged too much and want to discuss your exact situation you can contact the ombudsperson for your insurance company. They should be able to help you.

  • Perry

    How long does a cancellation stay on your record?

  • http://www.insurancehotline.com/ InsuranceHotline.com

    Hello Perry,

    Cancellations for non-pay will remain on your record for 3 years.

  • http://www.insurancehotline.com/ InsuranceHotline.com

    Hello Perry,

    Cancellations will remain on your record for 3 years.

  • Pat

    I changed my account from which they are withdrawing the payment, the rep told me just to let it bounce or put a stop payment on it and they will take it from the new account afterwards since it was too late to stop the payment on their end, I guess they need 10 days. This won’t cause a problem with my coverage will it? I even told the guy I could pay early or something to stop but he insisted it won’t be an issue.

  • http://www.insurancehotline.com/ InsuranceHotline.com

    Hello Pat,

    This is something you would want to confirm (maybe get in writing) from your broker/agent.

  • Totally Disgusted

    If you get cancelled for something like a late payment, then the insurance companies shouldn’t rule be able to cancel you, and your rates should not go up, doing this is nothing more than a “Cash Cow” and makes them line their pockets with more gold at our expense………….this is not fair practice!! If you have an accident, and the pay out cost is extremely high due to the accident, then and only then should your rates go up! The Government of Canada needs to take back their control of the country, and quit letting “Corporate Canada” make the rules!

  • http://www.insurancehotline.com/ InsuranceHotline.com


    If you can prove to Aviva that you paid and the bank provides you with a letter stating that your account had been compromised, you might be able to have the NSF’s off your record.

    Thank you

  • Unhappy Ex-Belair Client

    I am the same as the rest. Cancellation due to missed payment. My rates are going to skyrocket now, this makes absolutely no sense to me.

    I was a Belair client, I paid the crashproof policy and have had one claim in the last 10 years (which happened to be a couple months ago). Now my policy is cancelling, my claim will come on my record (crashproof does nothing now that they are cancelling me) and I have to scramble to find insurance in five days because they send me cancellation notice via snail mail which I only check at best once a week.

    This seems like a totally ridiculous accounts receivable issue and nothing more. I am going to be penalized thousands of dollars over time because I was 10 days late paying $180 three times in one term (and I paid two penalty fees on top of it). I was travelling and did not have my finances in order during this time. Insurance companies should not be allowed to smear your rating and rates over something so trivial.

  • Help

    My car insurance was terminated by my insurance company due to missed payment, is it possible to apply to another insurance company because they don’t want to accept me or get me another policy. Please need advice. Thank you

  • Danny Pimentel

    Any insurance broker that will write me a policy ive had two non payments in 3 years with out a down payment? No accidents no tickets in 11 years and i have to pay up front for insurance what do you call good driving.

  • Jackytan

    You ought to be ashamed of yourself for such a usery position

  • Anonymous

    I missed a payment and apparently they sent me a letter notifying me of due date and cancellation but i live in a student house and i didn’t receive it!!!! They cancelled my insurance do i have any right here is there any exceptions that they would reinstate my policy back???? Plz advise

  • InsuranceHotline

    If the insurance company wants to cancel your policy they must send you a registered letter.
    If you didn’t get it, that is not the insurance companies responsibility.

    You should contact them to see if they will reinstate your coverage.

  • Nicole

    Recently, I received a cancellation letter regarding my insurance policy, however, I was able to pay prior to the policy being terminated. Unfortunately, I have missed another payment. Will my policy be immediately terminated or will I receive another 30 day notice?

  • InsuranceHotline

    You must be given notice of cancellation. If you pay within the notice period you should not be terminated.

  • Peter E

    If you don’t pay your bill, you should get cancelled. This is how the grown up world works. You signed a contract that you are expected to live up to, as did the insurer. You did not live up to your end of the agreement, and they have every right to cancel you. “Corporate Canada” employs the vast majority of Canadians, and pays the vast majority of taxes that fund services. If you don’t like them, go live in a cave and live off the land

  • Peter E

    If you cannot afford car insurance, don’t have a car.

  • Peter E

    Ashamed of what? These are the rules, and they are spelled out. Nobody forces people into buying a car. If you sign an agreement to pay for coverage, you should pay on time. End of story. This is how the real world works. If you don’t pay rent, you are evicted. If you don’t pay your mortgage, the bank takes your house. If you don’t pay for groceries as you leave the store, you are arrested for stealing.

    How about some personal responsibility??

  • charlene clarke

    I paid my renewal and was informed 2 months later that I was cancelled because USF didnt file in time. They had all my contact info and failed to inform me until I emailed them to inquire of no activity on my bank account for 2 months. I am being punished for their mistakes and now auto insurance is gone up to $2400 per year lump sum payment from $700 per year monthly payments. These kinds of thieves are impossible to stop.

  • redcat

    i guess you have never had a problem or the bank screws up . but your perfect right. fu-king rube

  • Peter E

    Of course I have had problems. That is part of life. However, I have always paid my bills. Never had an NSF. If I can’t afford something, I don’t buy it. Having a car and car insurance is a luxury, not a human right, nor is it a necessity. Lots of people don’t own cars.

    But I guess I am a grown-up….. what do I know

  • Metis Woman

    canceled insurance in 2012 had no insurance since or driven. going to buy a car now can I get insurance even with a canceled insurane from 4 years ago

  • Rod

    You are an idiot. You look at it as black and white. In the perfect world yes this is not it and you don’t know another person’s situation or what has happened in their life to cause he or she to not be able to pay their insurance on time or not at all. Compassion certainly is not your suit

  • Peter E

    What does compassion have to do with not paying your bills on time? If your boss doesn’t pay you on time and you miss a rent or mortgage payment, will you have “compassion”?? Please.. If you can’t pay your insurance, put it on hold (comprehensive only), or sell your car. No different than any other bill. You sign a contract, then honour it. Just like you expect others to honour contracts that they sign for your benefit.


    Insurance is SO SCAM. I was with RBC insurance and have been a loyal client for more than 8 years- no tickets, no accidents- nothing. I had a missed payment while on vacation. When I came back, no courtesy phone calls or emails were sent, but instead I received a letter saying my policy has been cancelled and was slapped with a fee. Even after paying the fee, RBC says that I cannot reinstate my insurance. Not only was I not informed, the mail they sent me was returned back to them because at my place of residence , you have to sign to receive the letter. So technically, I wasn’t aware. Now when I look for quotes with other insurance companies, the quotes are so ridiculous. Like c’mon, you can’t do a one time forgiveness courtesy? Jesus.

  • little mad

    Hi, My Insurance company cancelled my insurance in September. I have been driving without insurance for 3 months without being notified. earlier in the year I had updated my new address and new Credit Card number and it seemed to be fine, as I had payments going through until August.. Then it looks like they clicked the wrong button on their computer and started using my old address, old number and old credit card. So no payment was mad since August.. I have not been notified, and had no idea this was happening as I did received a random Thanksgiving card from their office in October. All important information has been going to the old address. I finally received 1 letter in November saying that my insurance has been cancelled in September! I called them and they seemed very confused and then told me that i’ll have to pay to get reinstated and pay a higher monthly fee each month for a mistake that they made. Is this even legal? I have offered to pay what I owe since I didn’t realize, as my payments go automatically, and haven’t been notified by them in any way about any issues.

  • InsuranceHotline

    You can contact the insurance company ombudsperson. They should be able to help you figure this out.

  • Tg

    I got cancer, then lost my job. I live rural. What now? How do I get to treatment? How do I look for work?
    How do I get to the food bank….ya, food bank, because I can’t even afford groceries!!!!! I couldn’t barely afford the insurance before and now it goes up because I couldn’t afford a couple of payments and got canceled….

  • Bill Meehan’s Nature, Bushcraf

    There are some things I can agree with and some I can’t, I went with an insurance provider due to an offer to good to refuse. I switched from my previous insurance provider of 9 years,all for a better rate, then I get sick and miss one payment,but catch up and pay that payment, only 7 months later I miss another payment only to find out no catching up this time and letter of cancellation sent out, I call my previous insurer asking to come back to them only to find out I am now red flagged as a high risk and insurance for house and car have tripled. Definatley know I cannot afford triple insurance rates so no need of taking on a responsibility that I know is un-affordable, So now I get to explain to my family that we will have the house and car repossessed even though no payments on those have ever been missed, yep seems fair doesn’t it Peter E who answers a lot of comments,losing home and car due to an insurance company.

  • Cristina Mihaela

    My boyfriend was offered 2 months free where he did not have to make payments. He got a call saying that they never had this in their system and that he is overdue and missed 2 months of payments. These insurance companies are f**** snakes. Now our car will be repossessed . I worked at the dealership where he bought his car, even the salesmen there were snakes. I had so many customers come to me to complain that they felt screwed over. This is what they do to screw you over. Always record your phone conversations with these people and get things in writing. AVOID TD AUTO INSURANCE AND BUYING A CAR FROM HONDA!!! If you don’t then at least get everything documented!

  • Sammy

    That’s so stupid. Some people like to ride their bicycle to work in the summer and there are a lot of us who fill in the gaps with car-sharing services like Pogo. And how is putting your vehicle on parking insurance to avoid insurance gap make someone less of a risk? Just because you don’t have insurance from time to time doesn’t mean the person isn’t driving or is less skilled than someone else who is every day. The goal of this rule is customer retention – period. Companies punish those who like to shop for better prices. Just another money grab tactic by insurance companies to get to your pocket! Just add the entire history of the drivers minus the gabs and there you go!