Ontario Auto Insurance Policy Statutory Conditions

An insurance policy is a legal contract between you and your insurance company. As part of the contract there are certain conditions that must be followed and met. These are called "Statutory Conditions". You will find these terms and conditions in the documentation that your insurance company sent you when you got your new policy.

Below is a partial look at a few statutory conditions that are included in the Ontario Auto Insurance Policy (OAP1).

Material Change in Risk

"1. (1) The insured named in this contract shall promptly notify the insurer or its local agent in writing of any change in the risk material to the contract and within the insured’s knowledge."

What this means: This condition means that the policy holder will let the insurance company know if either the use of the vehicle changes or there is change with the drivers of the vehicle that will significantly change the insurance company’s risk. For example, at the time you purchased your auto policy, you let your insurance company know that you use the vehicle for pleasure and for driving to and from work. If that changed and you now were using your vehicle to deliver pizzas, then that is a material change in the use of the vehicle, of which the insurance company should be made aware.

Authority to Drive

"4. (1) The insured shall not drive or operate or permit any other person to drive or operate the automobile unless the insured or other person is authorized by law to drive or operate it."

What this means: This condition means that if you drive your vehicle or let someone drive your vehicle without a valid licence you may not have coverage in the event of a loss.


"11. (1) Subject to section 12 of the Compulsory Automobile Insurance Act and sections 237 and 238 of the Insurance Act, this contract may be terminated by the insurer giving to the insured fifteen days notice of termination by registered mail or five days written notice of termination personally delivered."

What this means: If the insurance company wants to cancel your policy in the middle of the policy term they must provide you with written notice. This will give you time to arrange for a new car insurance policy. An insurance company will give you the reason for the cancellation and will usually only cancel a policy in the middle of the term because of a breach in one of the statutory conditions. You, on the other hand, can cancel your policy anytime you want.

For the full list of statutory conditions, you can check the Financial Services Commission of Ontario website.

So, it’s important to contact your insurance professional immediately if there is a change that the insurance company must be made aware of. Not adhering to these policy conditions may mean that you have no (or limited) coverage in the event of an accident.