Can Your Insurer Cancel Your Policy if You Fail to Change Your Address?


Imagine getting an unexpected piece of correspondence from your insurance company. You're asked to update your address before a short deadline. You do as they ask, even though there are no changes. You send out the required form by registered mail before the date.

But they cancel your policy anyway, saying they didn't get the paperwork in time. Can they do this? As it turns out, the answer is yes. This was the scenario recently faced by a consumer in Ontario, and his situation might not be unique.

Auto insurance companies have a number of rules they follow that allow them to deny insurance or cancel a policy. These are called the underwriting rules. In Ontario, there is also legislation that puts the obligation on the consumer to keep their insurer informed. Here's what that means for you -- and your auto insurance coverage.

What Are Underwriting Rules?

Underwriting rules are policies that determine whether or not an insurance company will sell you a policy or keep one in place. The specific rules are different from company to company. Some common ones are refusing coverage because of poor accident history, past non-payment of premiums, or past failure to give full information in an insurance application.

In Ontario, every auto insurer must have its underwriting rules approved by the Financial Services Commission of Ontario (FSCO). That means they can't make up rules on the spot, but there may nonetheless be limitations that surprise you. That could include things like losing your coverage because a form arrived late to the insurer's office.

The underwriting rules are just the beginning when it comes to the legal regime that surrounds car insurance. Ontario law also limits when an insurer can cancel auto insurance, by virtue of the Compulsory Auto Insurance Act. That legislation puts restrictions on the insurer, but also a greater burden on the consumer to uphold their part of the bargain.

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What Are Other Legal Obligations?

The Insurance Bureau of Canada describes insurance as a "two-way contract," where both parties have certain rights and responsibilities. Those include providing accurate information and updating your information. You also have to report claims as soon as possible, and in return, the insurer should handle your claim promptly.

According to the CAIA, your insurer may cancel coverage if there is a "material change of risk" or if you fail to pay premiums. Giving false information or withholding information might also lead to contract termination. The upshot? Read that correspondence from your insurance company. Let them know when something changes and pay those premiums on time.

What if You Disagree?

Losing your insurance over what seems like a technicality can be hard to take. Fortunately, there are steps you can take if you have been treated unfairly. Your insurance company has a complaints officer. Discuss the issue with them. If it's not resolved, you can then file an official complaint with the FSCO.

Discover Your Options for Auto Insurance

It's great to have a positive relationship with your insurer. But it also doesn't hurt to shop around to see what else is out there. To find out new options for auto insurance, check out today.