People cancel their policies for various reasons–but what happens if you cancel car insurance? When you cancel your car insurance, you stop paying premiums to cover any damages should you get into a car-related accident.
The best time to cancel your car insurance is during renewal since this will lessen the risk of having to pay cancellation charges. Cancelling in the middle of your policy’s tenure can cost you fees from as low as $25 to as high as a percentage of your overall premium.
FAQs About Car Insurance Cancellation
Here are the answers to some commonly asked questions about cancelling your car insurance.
When should I cancel my car insurance if I’m selling my vehicle?
If you’re selling your car, you should cancel your car insurance effective the date of sale. You can’t transfer the plan to the new car owner; they’ll have to arrange to get their policy after they get the car (ideally effective on the date of sale, as well).
Do I have to cancel my car insurance if I’m replacing my car?
You don’t have to cancel your car insurance and take out a new policy if you’re only replacing your car. Most insurance companies will only have to update your plan to cover the new vehicle. This might result in additional premiums, but this option is likely still cheaper than having to get a new policy.
Can an insurance company cancel my car insurance?
A car insurance company may cancel your policy. It can occur before your renewal (known as a ‘non-renewal’), and it usually happens because you no longer qualify for the plan due to tickets, claims, vehicles, or the use of the plan.
Tips for Cancelling Car Insurance
If you’re cancelling your car insurance, for whatever reason it may be, remember these tips.
Don’t Cancel Without a New Plan in Place
You’re legally required to have car insurance for every vehicle in Canada. So, if you’re cancelling a policy but still have a car, then you’ll have to be sure that you have new car insurance in place before you end the old one.
Check for Insurance Requirements
Different provinces have varying rules and regulations concerning the types and amounts of coverage your car insurance policy should have. If you’re cancelling your current plan because you’re moving to a new place, check if your new plan covers the new requirements.
Check the Fine Print
Cancelling a car insurance plan can come with cancellation fees. This differs depending on your provider and contract, so it’s best to read the fine print before you make any decisions so that you know what to expect.
Car Insurance Is a Necessity
Note that it’s illegal to drive a car without insurance anywhere in Canada. So, not only is it an advantage to have for reasons of finances, safety, and convenience, but it’s a requirement that you must abide by to be able to legally drive in the country.