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Any driver in Canada is aware that vehicle insurance is mandatory. Or at least they should be aware of it. Drivers have the option of going for the basic mandatory insurance. Or they can buy extra insurance. It means that they have the opportunity to shop around for this. Yet, the ultimate decision is up to the insurance companies. They are the ones that decide whether they are going to take an individual on as a client for vehicle insurance.

Can An Insurance Company Cancel Vehicle Insurance?


It is the insurance company that is responsible to pay for any potential claims. They have the right to determine who they want to take on as clients. They also have the right to cancel insurance. But there must be specific reasons for them to do this.

Inaccurate Information

Insurance Companies screen clients that want vehicle insurance. During this process the applicant provides information.

Applications are subject to the approval of the Insurance Company. These applications contain a good amount of information. It is the information that the insurance company relies on. They rely on it to determine the premiums. There cannot be any information omitted or inaccurate. It there is, it creates grounds for cancellation of the insurance.

On occasion those are looking for insurance will mislead the insurance company. It may be they are obtaining the insurance, but there are going to be other drivers. This disclosure is mandatory.

Unknown Details

It may be that the insurance company uncovers a detail that they were not aware of. This detail could increase the risk for the insurance company. Most often this will happen in the first few months of the policy acceptance.

Loss of Driving Privileges

If an individual has lost their driving privileges their insurance is cancelled. There are several reasons why the loss of license can happen. It can it be as a result of a conviction. Or the license is under suspension. There could also be health reasons for having the license evoked.

Not Making The Payments

Anyone that is buying vehicle insurance has to pay the premiums. There are different payment plans that the insurance companies will set up. Some will allow for monthly payments. Others will go on quarterly. Then there are some that will insist that the insurance has to be paid up for the entire year.  Insurance premiums require payment. Payments have to be on time. If not these are again grounds for cancellation of the insurance.

The Repercussions Of Cancellation Of Insurance

At times there are individuals who have their insurance cancelled. They do not realize the seriousness of this. What they may assume is that they can just go to another insurance company. They think they can buy auto insurance from them. Unfortunately, this is not that easy to do. The cancellation of insurance will appear in the driving history. As such many other insurance companies may not want to ensure the driver. They have the option to do this.  Some do find an insurance company to cover them. But they may find that the premiums are high.

Notification Of Cancellation


An insurance company is not allowed to just cancel the insurance. They cannot do this without notifying the insured. The format for doing this will most often be through the registered mail. The Canadian courts have deemed that the responsibility is on the insurance companies. It is up to them to ensure that the insured received the notice of cancellation. If the letter isn’t returned the Insurance company can assume notification has been carried out. Registered mail most often requires a signature upon acceptance.

Each insurance company has its policy as to how they handle the notification. In some cases that they may deliver the notice in person where they will have to give a ten days notice.  Registered mail is then considered as a 30-day notice. But the rules will vary according to the province and for the reasons for the cancellation.

What Happens to the Premium Payments?

Some individuals pay their insurance up front for the year. It is possible that an insurance company could cancel the insurance. They could do this during this period. If so there are rules and regulations. It is these rules that determine how much the premium payment can amount to.  In most cases, it will be on a proportionate the basis.

Non-renewal Of Insurance

Non-renewal of insurance takes place at the time that the policy is up for renewal. The insurance company may decide that they no longer want to ensure the driver. There can be several reasons for this. One of them may be the insurance company is no longer offering this type of insurance.

Each time the insurance company is going to renew a policy, they will review it carefully.  They will review the driving record. They will look at the number of claims that are issued. If these are frequent, then they may feel that the client is not a good fit for them. They have the option to be able to make the decision not to renew.

Aside from this the insurance company may see a deterioration in the driving history. As a result of this, the insurance company may not feel comfortable with the client. They may not feel that the driver is a good candidate for insurance under their company. It is another reason why drivers must maintain a good driving history.

Obligation Of Insurance Company


In Ontario, there is the insurance act that they need to follow. Under section 236 of the act, it outlines how an insurance company must handle a non-renewal. These rules state that the insurance company can give no less than 30 days notice. In regards to the non-renewable decision made. It must be a notice in writing. Or the other option is they can give the notice through the insured’s broker.

It is most important that every insured individual pays attention to the mail. Also to any other correspondence .that they receive from their insurance company. It could pertain to cancellation or a non-renewal.

Assumptions that the insurance renewal is in place is not wise. At least not without receiving notification of such from the insurance company.

If one does not agree with the cancellation, there are steps at that they can take. It is done through the dispute resolution insurance Bureau of Canada.

About the Author: Ashley Miller

Ashley is an insurance content professional and very knowledgeable on all related subjects. Ashley has over 12 years of insurance content writing experience working with various insurance companies throughout her career.