After setting up an auto insurance policy and going on your way, you might come across a better insurance company. Due to this reason, you might be wondering if you are allowed to cancel your policy before it even starts. Although this rarely happens in the insurance industry, you can surely cancel your insurance policy before it starts. In fact, you actually can’t even be penalized for doing this. There are laws in Canada that allow you to be able to break contracts within the first few days. Insurance does not fall outside of these rules, which means you should have no problem canceling your insurance before it starts.

How Long Does The Cancelation Cooling Off Period Last?

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In Canada, you have a total of 14 days after the start of a new insurance policy to cancel it. Some insurance companies are actually more generous than this and will offer longer periods of time. However, you should have at least 14 days to decide if you have made a mistake or not by opening the policy. So long as you cancel the policy within the cooling off period, you should be able to receive a refund and not be charged cancellation fees for ending the insurance contract.

Will There Be Any Fees For Canceling My Policy?

After the 14 day cooling off period has ended, it is likely that there will be fees for ending your insurance contract. Different insurance companies have different fees associated with canceling an insurance policy. Sometimes the fees are stacked so that canceling your insurance policy early on will cost you more money. This is done so that people will think twice about canceling their insurance contract. However, fees shouldn’t cost more than a month’s worth of insurance premium. If you find a good enough insurance policy to switch to, you can definitely save some money paying the cancellation fees and switching insurance companies.

What Is A Short Rate Insurance Policy?

If you cancel your insurance with a short rate insurance policy, there will be charges. Unfortunately, this is the type of policy that many insurance companies carry. When you cancel your policy, you will be charged a portion of or the entire amount left on your insurance policy. When you have this type of policy, you might want to think twice about a cancellation. Cancelling this type of policy can cost you more money than you might save switching to another insurer, which is important to keep in mind.

What Is A Pro Rate Insurance Policy?

This is the type of policy you should go for if you want to have the least amount of problems canceling your insurance policy. A Pro Rate policy will allow you to cancel your insurance policy and get a full refund for the time you didn’t use. Some insurance companies use this system, but most use the Short Rate system. This is definitely something you might want to check into if you are setting up a new insurance policy.

Will Claims Go Through If I Cancel My Insurance?

When you cancel your car insurance coverage, your old insurance provider is still required to process any claims that you made while you were insured by them. Insurance companies don’t like it when you leave after submitting a claim, but things like this do happen. You might have a hard time getting a new insurance provider if you have an open claim through another insurer. However, if you can manage to find someone to take you, you can leave if you want to. Your insurance company does have a legal obligation to pursue your insurance claims and you can pursue them with legal action if they do not.

Should I Wait Until My Policy Ends To Shop For A Different Insurance Provider?

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No, you should not wait until your policy ends to shop for a new provider. You should always shop for a new insurance provider well before your insurance policy ends. If you don’t, you are likely going to be stuck going with your old insurance provider again or accepting a much higher insurance premium through a different company. Insurance companies know that it doesn’t look good for anyone not to have insurance coverage. Shopping around at the last possible minute is sure to make prices be higher. It is best to start shopping around 30 days before the end of your insurance policy, once you receive your notice of renewal.

Do I Need To Write An Insurance Cancellation Letter?

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You don’t necessarily have to write an insurance cancellation letter. Different insurance companies handle cancellations differently. Some insurance providers might want a letter from you in order to make the cancellation official. Other insurance providers might just want you to talk to a customer service rep to make it official. There are even providers who just have a cancellation form that you have to sign. Insurance companies like to keep logs of all of their customers and you can expect to have to do something to cancel your insurance policy. However, you probably won’t find out until you actually call your insurance provider and tell them you want to cancel.

Do I Have To Contact My Local Service Center When Changing Insurance Providers?

Yes, you do have to contact your local driving center. At your service center, they will have a file containing your insurance policy as well as registered vehicles. Any time that you need to update your address, personal information or insurance, you need to update your service center. Failing to do so can result in major penalties, so it is best to do so as soon as possible.

To Conclude

Canceling your insurance policy is very easy to do. Your insurance provider should be able to help you through the cancellation process. Depending on when you cancel, you might have to pay fees to do so. However, when it comes to insurance, you are always free to leave the contract if you want to. Remember to make sure that you have another policy set up before you leave your current insurance provider. Gaps in insurance coverage don’t look good on your record and can cause major problems in being able to get coverage from other providers.

Resources:

https://smartcoverage.ca/blog/am-i-allowed-cancel-my-auto-insurance-policy/
https://www.thebalance.com/why-did-i-get-a-car-insurance-cancellation-letter-527275
https://www.dmv.org/insurance/how-to-cancel-an-auto-insurance-policy.php