Insurance Cancelled For Non-payment

Aug 30, 2023

Getting insurance after being cancelled for non-payment

People miss payments. Sometimes it slips our mind, we forget to make a payment until after the due date, there is an issue with our automatic withdrawal, we change bank accounts and forget to notify our insurer, or something happens in our lives that prevents us from making a insurance payment.

While missing a payment on your phone or cable bill may not have severe repercussions, non-payment of insurance can quickly land you in some hot water with your insurer and your Ontario car insurance may be cancelled for non-payment. This could lead to more expensive coverage or challenges getting insured.

What is the impact of a non-payment on insurance?

A non-payment is taken very seriously by insurance companies. Even if you don’t mean to miss a payment, it can still impact your insurability now and in the future.

While every company has different rules regarding a non-payment, sometimes all it takes is a couple of missed payments to result in cancellation. This can make it more difficult for you to get insured, and you may need high-risk auto insurance.

Is a missed insurance payment a big deal?

If your provider contacts you or notices the missed payment, you should immediately address a missed payment on your insurance. Sometimes, a payment can get overlooked amid paying other bills, moving money into your account and other factors.

But even one late payment, intentional or not, can cause your insurer to raise your rates or choose not to renew you – so yes, a missed insurance payment can be a big deal, especially if you don’t handle the situation promptly.

What to do if you can’t afford or miss a car insurance payment

Not being able to pay a bill or forgetting to make a payment can be stressful. But it happens. If you find yourself in this situation, you need to be proactive and take steps to rectify the situation as quickly as possible. Below are some actions to take based on your situation:

If the payment is not due yet: If you can't pay your auto insurance premium, tell your insurer ASAP. You may be able to negotiate a new payment plan and avoid cancellation. They may even extend the deadline temporarily.
If you missed payment by a few days: Notify your insurance company as soon as you realize your mistake. Some insurance do provide a grace period if you miss a payment, especially if this is the first time. A late fee may apply. However, if you are consistently late with your payments, your insurer may temporarily cancel your policy and alternative payment arrangement may be required. Contact your insurer to learn the length of the grace period and the late fee.
If your policy has been cancelled: Failure to pay will result in cancellation. You may face higher fees, and difficulty getting reinsured.

How do missed payments or cancellations affect my insurance?

Failure to make a payment or getting cancelled can affect your car insurance in a number of important ways. Here are some reasons to never overlook the importance of paying on time :

Cancellation : You may get cancelled for non-payment and you could have a lapse in insurance.
Increased Costs : You could face a premium increase upon policy renewal.
Insurance History : Non-payment will be noted on your insurance history.
Additional Fees : Late payment or NSF fees may be charged by the company and you may face other administrative fees.
Payments : You may be required to pay your premiums upfront in 3 or 6 month terms or even a complete full year term.

Don’t forget that even if you have been cancelled and you switch to a new insurer, outstanding payments will go into collections and impact your credit rating. That is another factor that could impact your ability to get insured in the future.

What to do if your insurance is cancelled for non-payment

Getting insurance after cancellation for non-payment can be a challenge. A recent or previous cancellation due to payment issues will create a gap in your coverage, and new insurers will want to know why you have a gap.

Don’t lie to them. If you lie to them during the application process, they will have grounds to cancel if they find out.

If your policy has been cancelled, your best option is to work with an advisor to see where you can get insured and find the most affordable price.

How long does being cancelled for non-payment stay on your insurance history?

The amount of time a cancelled for non-payment stays on your insurance will depend on a few things :

Whether or not you are with the same company.
If you have switched providers.
The amount of times you have been cancelled for non-payment.

Most insurers go back 3 years to see if you have been cancelled for non-payment. Others go back 6 and some look as far back as 10 years.

It will impact your insurance short-term; and it could impact you long-term, even when you switch to a new provider.

Tips to prevent your insurance from getting cancelled

Here are some tips to help you avoid payment issues :

Pay Annually : You can pay your full annual premium up front. Most companies offer discount for doing that and you could save up to 10%.
Monthly Payment Reminders : Set a reminder in your phone to make your monthly payment.
Auto Payments : Set up automatic withdrawal or payment from your bank account or credit card.
Account Balance : Have a buffer in your account to ensure you have enough money for payment.
Shop : Shop around and compare Ontario car insurance quotes to find a better rate that meets your needs and budget.

What Happens If Your Insurance Is Cancelled For Non-payment?