Whether you've had your auto insurance policy with an insurer for one year or ten years, comparing insurance quotes is always a good idea - especially when you're approaching your annual renewal date. If you find a cheaper policy that fits your needs, it may be time to switch your insurance provider. Follow these steps to make canceling your car insurance policy easy:
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Inform your insurance provider
Contact your insurer to inform them of your decision to cancel your coverage with them. If you bought insurance online, give the customer service line a call to request cancellation. If you worked with an agent, find their contact details on their agency website or your policy statement and reach out to make the request.
You will likely be asked to provide confirmation in writing of your intention to cancel your policy, complete with the effective date of the cancellation. Keep in mind that your coverage and premiums will not be affected by your decision until the effective date.
Mid-term cancellation
Your policy can be canceled mid-term, but before you decide to cancel, make sure you ask if there are any penalties for canceling. If there are, you might choose to wait until your policy's renewal date, and if that's the case, you need to plan for the new insurance policy to start right after your old one ends.
This is important because it helps you avoid any gaps in coverage, like having your coverage end on a Tuesday and starting a new one on a Thursday, which may increase your future premiums.
Refunds and final payments
If you pay your premiums annually, your insurance provider will likely issue a cheque for the pro-rated portion of the term remaining, minus any penalties for the cancellation. If you pay monthly, you will still owe the cancellation fees if there are any.
Avoid contacting your bank to stop payment on the pre-authorized debits, as that will result in cancellation of your policy for non-payment. This will be recorded on your car insurance history and affect your future premiums and possibly even your ability to secure insurance in the future.
Multi-product discounts
Perhaps the most received insurance discount is a discount for holding multiple insurance products/policies with the same insurance company, otherwise known as bundling. If you're holding your home insurance and your vehicle insurance with the same insurer, you'll likely see a line on both policies for a multi-product discount.
Cancelling either policy disqualifies you from receiving this discount, so you'll likely find that whichever policy remains with your original insurer will see a premium increase. You may want to consider switching all lines of business to the new insurance company if they can offer you a competitive rate.
Related: Save on auto insurance with multi-vehicle discounts
Start fresh
Switching your auto insurance policy from one company to another means starting fresh. This means you’ll need to provide basic information such as your name, address, phone number, date of birth, and driver's licence. The new insurance company will review your insurance history as well as your driving record.
If you are currently paying your premium in monthly installments, as a new customer, you may not be entitled to that privilege. To qualify for monthly premium payments, your new insurer will usually require a down payment and a direct debit method (a void cheque or completed bank form) to process your payments monthly instead of annually.
Not driving for a while? Consider suspending your insurance instead
If you're going to be away for a long time, storing your car, dealing with a suspended license, or unable to drive due to health reasons, or simply want to save money and curb your carbon footprint, you might want to suspend your car insurance.
In Ontario, there are two forms you can fill to make the suspension possible:
Ontario Policy Change Form 16 (OPCF 16): This form will allow you to temporarily stop certain parts of your insurance, all while keeping your comprehensive coverage active to protect against risks like theft or fire while your car is in storage.
Ontario Policy Change Form 17 (OPCF 17): This is meant to restart your insurance once you're ready to drive again, so you won't have to start a new policy. Keep in mind that you can only suspend your car insurance if you won't be driving for 45 days or more.
Not all provinces in Canada have the same forms as Ontario for suspending car insurance. Each province has its own procedures, so make sure to consult your insurance company to get the relevant information about what is possible in your province.
Learn more about OPCF 16 & OPCF 17: Suspension and reinstatement of coverage
Your new policy
Make sure you have secured a replacement policy and scheduled the start date for your new coverage before you submit a written notice of cancellation of your existing insurance policy.
After comparing insurance quotes online, contact the broker or provider to make the policy arrangements. Whatever the reason for cancelling your last policy, you still need to have insurance coverage to protect you until your new policy takes effect to ensure that you have continuous coverage.
If your insurance coverage lapses, even as an error on your part, you will not be covered in the case of an accident, and it could mean severe legal and/or financial consequences.
When should you cancel your car insurance policy?
If you go through any life changing events like marriage, divorce or retirement, these events can impact your insurance needs. Review your policy during these major life transitions.
If you're unhappy with your current insurer or find a better rate elsewhere, it's reasonable to switch companies.
You'll need to cancel the insurance policy if you're selling your car. However, keep it until the sale is complete, and the new owner obtains their own coverage.
If you're relocating into a new province and your current insurer doesn't cover your new location, switch to a new company. Get your new policy in place before canceling the old one.
If you’re giving up your car for good for lifestyle reasons, check with your insurance provider about how to do so without incurring any penalties now or later on. Contrary to popular belief, voluntarily cancelling your insurance is treated differently than having your insurance cancelled by your provider and is not subject to the same premium increases.
Insurance policy cancellation may sound like a complicated process, but it doesn't have to be. Following these tips should help make sure your policy switch will be smooth and easy. Your insurance broker or provider can help you with any additional questions you might have.
Read more: Should you add your adult children to your auto insurance policy?
