Can insurance policies be cancelled in Canada?
Insurance policies are essential to our lives, providing us with valuable protection and peace of mind. However, it’s vital to understand that insurance companies in Canada do have the authority to cancel policies under certain circumstances. In this blog post, we’ll explore the reasons behind policy cancellations and share some preventive measures to help you avoid this outcome. So, let’s dive in!
Reasons for Insurance Policy Cancellations
Insurance companies typically cancel policies for non-payment and a change in risk eligibility. Let’s take a closer look at each of these factors.
Non-Payment
One common reason for policy cancellation is non-payment. Insurance providers send payment notices to their clients, reminding them of upcoming payment due dates. These notices are sent daily, especially when payments are overdue or insufficient funds are in the bank account. To avoid any issues, here are some tips:
- Set reminders for yourself a week before the payment due date. Reminders will give you ample time to ensure sufficient funds are available.
- If you’re on monthly payments, consider setting up automatic withdrawals from a dedicated account or a seldom-used credit card to ensure smooth payments.
- Remember that payments are due precisely at 12:01 am on the due date, so make sure to plan accordingly.
- It’s crucial to ensure payment, as insurance companies view this as a risk and may hesitate to offer you a payment plan. Cancellation for non-payment can make it challenging to find alternative options.
Change in Risk Eligibility
Insurance providers have specific guidelines for accepting and rejecting policies, regardless of whether it’s a renewal or midterm adjustment. These guidelines can relate to various factors, such as the age of home updates or the frequency of vehicle use. If your policy no longer meets the provider’s requirements, don’t panic! Other providers may be willing to accept the risk. Each insurance company has different standards, so finding an alternative should be feasible.
Preventive Measures to Avoid Policy Cancellations
Now that we’ve covered the reasons behind policy cancellations let’s explore some preventive measures to help you avoid this situation.
Keep Contact Information Updated
Ensure your insurance broker always has your current contact information, including your phone number and email address. This way, we can contact you if there are any issues with your policy or payment reminders.
Notify the Insurance Company of Any Changes
If you’re planning to move or if any significant changes in your circumstances may affect your insurance policy, promptly notify your broker. This proactive step will help them assess necessary adjustments and prevent potential policy cancellations.
Be Transparent About Risk Changes
Suppose you experience a change in your risk profile, such as using your vehicle for a different purpose than initially stated in the policy. In that case, it’s crucial to inform your insurance broker. They can guide you on whether adjustments are required or help you find alternative coverage that matches your updated needs.
Avoid Lapsing Policies on Renewal
Lastly, a common mistake we see is when a client doesn’t cancel their existing policy when switching to a different insurance provider. This oversight can lead to the current provider lapsing the policy during the renewal term, potentially resulting in additional fees. Remember that policies are automatically renewed, so if you plan to switch, inform your current provider to avoid complications.
Understanding insurance policy cancellations in Canada is essential for every policyholder. You can maintain robust and reliable insurance coverage by staying informed about the reasons behind cancellations and implementing preventive measures. Remember to communicate any changes or concerns to your insurance company. Don’t hesitate to seek assistance or information from reputable sources like the Government of Canada’s official website on insurance.
We’re here to help you understand your policy and feel confident with your insurance coverage. Connect with us today to discuss your current policy or to get started with a quote today.