12 ways you could be invalidating your car insurance

12 minute read Published on Jul 26, 2023 by BrokerLink Communications

Photo of a woman looking at her mobile phone in a car

Car insurance policies exist to protect drivers from risk. But no car insurance policy protects against everything. In fact, all policies come with a set of exclusions or limits. Going past these limits or breaking the terms of your insurance contract can result in your policy being invalidated. Learn more about the different ways that you could invalidate your auto insurance plan below.

12 ways drivers can invalidate their auto insurance policies

There are many ways that drivers in Canada can invalidate their auto insurance policies. It is important that all policyholders are aware of them so that they can avoid falling into such traps and having their policies cancelled, or at the very least, their insurance claims rejected. From the most common reason for invalidation - non-payment - to some of the more niche reasons, like failing to report vehicle modifications, keep reading for a list of 12 ways that drivers can invalidate their car insurance policies in Canada:


As mentioned, non-payment is one of the most common ways that a driver can invalidate their car insurance policy in Canada. Non-payment means that the policyholder has not made their insurance payment. Skipping any number of insurance payments - even a single one - can give your insurance company the right to cancel your policy. Typically, when a customer has failed to make their insurance payment, the insurance company will notify them, giving them a certain number of days to make the moment. If the customer still does not pay in this time frame, then the insurance company can cancel your policy. Thus, if you are at risk of not being able to pay your insurance policy, make sure to contact your provider. Insurance companies are more understanding than you might think, and if you express that you are struggling to pay your bills on time, they might offer a new payment plan. Lastly, if you have multiple auto insurance policies, make sure that you set payment reminders for each one. Otherwise, you run the risk of accidentally forgetting to make a payment and having your policy cancelled.


Another way that a Canadian driver might invalidate their car insurance policy is if they misrepresent themselves or their situation. Misrepresentation is when a customer lies or intentionally withholds important information when purchasing auto insurance. Some customers might be tempted to misrepresent their situation - for example, claiming they live at a different address than their real address - in order to benefit from a lower premium. This is always a mistake, if and when your insurer finds out that you lied, they can void your insurance coverage. A few lies that policyholders may be tempted to tell their insurance company include claiming that they are the sole driver of their vehicle when in reality, several other members of their household drive their car regularly or failing to tell their provider that they use their vehicle for both business and personal use instead of just personal use. At the end of the day, it is crucial that all customers tell the whole truth when applying for car insurance.


Fraud and mispronunciation go hand in hand and are both ways that your car insurance policy could become invalidated. Insurance fraud is when a customer files a false or fraudulent claim or lies about the circumstances of a particular loss. For example, if you file a liability insurance claim but lie and say that you were driving when in reality someone else was driving, your insurer may not only reject your claim but cancel your policy. Thus, as with misrepresentation, it is always better to tell your insurance company the truth. Lying can have serious repercussions.

Change in situation or material change in risk

A change in situation or material change in risk may also lead to an invalidated car insurance policy. A change in situation is if something happens to you that significantly changes your risk level as a driver. For example, if you are diagnosed with a medical illness that impedes your ability to drive, your insurance company is within its rights to cancel your policy.

Filing too many insurance claims

Filing a high number of insurance claims with your provider is yet another way that a driver can have their policy invalidated. Specifically, the number of claims filed usually has to happen over a short period. When you file too many insurance claims, this indicates to your insurance company that you are a high-risk driver. At the very least, being at a higher risk of getting into an accident will lead to more expensive insurance rates or denial of certain coverages, as insurers can renew policies without coverages if they deem the customer high risk. However, in a worst-case scenario, it can also lead to your insurance company cancelling your existing car insurance policy.

Driving with a suspended driver’s licence

If your driver’s licence has been suspended, such as if you were convicted of impaired driving, your insurance company may invalidate your policy. For any customer whose licence is at risk of being suspended, we recommend you contact your provider right away if you want to avoid a policy cancellation.

Failing to notify your insurer about vehicle modifications

Certain vehicle modifications can affect your insurance rates. Some might even be forbidden according to the terms of your insurance contract. Thus, if you plan to modify your vehicle, you must review the terms of your contract and notify your car insurance provider in advance. Failing to do so and moving forward with modifications can cause your insurance company to invalidate your policy.

Driving under the influence

Getting caught driving under the influence of alcohol or drugs, including cannabis, whether doing so causes you to be involved in an accident, can lead to your car insurance plan being invalidated. The same goes if you give someone else permission to drive your vehicle and they are caught driving under the influence.

Committing an illegal act

Similar to the principle behind driving under the influence, if you are caught and convicted of committing an illegal act while driving, your insurance company is likely to deny your claim and invalidate your policy. Examples of illegal acts on the road include engaging in racing, driving a car without insurance, or allowing someone else to operate your vehicle who engages in any sort of illegal act. To find out more about safe driving tips, contact BrokerLink.


Using your car for ride sharing without informing your insurance company

Personal car insurance plans are just that - personal. This means that, under the terms of your insurance contract, you are likely only permitted to operate a vehicle for personal use. Participating in ride sharing, such as through companies like Uber or Lyft, qualify as business use. Thus, if a loss occurs while using your vehicle for ride sharing, and you never told your insurer that you use it for this purpose, your car insurance provider can deny your claim. They can even cancel your policy, as this would be an example of misrepresentation. To avoid this outcome, make sure that you notify your insurer and purchase additional coverage, like comprehensive coverage or accident forgiveness coverage.

Failing to update your personal information

It may not sound like a big deal, but something as small as forgetting to tell your insurance provider about a change in your home address can be enough to void your coverage. It may also lead to your bills heading to the wrong address which can lead to missed payments. As with failing to tell your insurance provider about ride sharing, forgetting to inform them about changes to your personal circumstances, like a change in address, may qualify as misrepresentation, leading to your policy being invalidated.

Regularly lending your vehicle to another driver

If you let a friend or family member borrow your car on a regular basis but you do not notify your insurance company, they could invalidate your policy. Car Insurance premiums are based on several factors, one of which is the respective driving histories of any person who regularly drives your vehicle. If you do not tell your insurance company that someone else has begun driving your car regularly, they could invalidate your policy. This is especially likely to be the case if the person you did not inform them about is a high-risk driver.

Tips to avoid invalidating your car insurance coverage

If you want to avoid invalidating your car insurance plan in Canada, follow the tips below:

Honesty is the best policy

Our first tip for avoiding having your car insurance plan invalidated is to tell the truth. Honesty is always the best policy when it comes to car insurance. If you do not want your policy to be cancelled, always be upfront about your circumstances and situation. This goes whether you are applying for your first-ever car insurance policy or submitting a claim to your insurer. A few circumstances that you must always be honest about, and notify your insurer about if any of them change, are as follows:

  • Your job
  • Your home address
  • Your driving history (including any accidents or incidents)
  • The make, model, and year of the vehicle you drive, along with any vehicle modifications
  • Where you park your vehicle overnight
  • Whether you use your car for business reasons, personal reasons, or both
  • Your annual mileage
  • The names of any drivers who reside at the same address

Obey the rules of the road

Since committing an illegal act is one of the ways that a driver can invalidate their policy, a tip for not having your policy invalidated is to obey the rules of the road. Driving safely and responsibly is critical at all times, both for yourself and everyone else on the road. It is also important for your car insurance plan. If you do not want your policy to be cancelled, make sure that you follow road rules, including speed limits and laws around racing, impaired driving, and more. Driving safely will also benefit you in that the cleaner your record, the lower your car insurance premium will be.

Make insurance payments on time

One final tip for avoiding having your car insurance plan invalidated is to make your payments on time. Making your insurance payments by the deadline, whether you opt for a monthly or annual plan, is crucial. Failure to make your payments on time is one of the most common reasons that car insurance plans get cancelled in Canada. To ensure you don’t miss your next payments, set a reminder on your computer or smartphone to make payment a few days before the due date. Alternatively, if you know you’re forgetful and it’s feasible to do so, choose to pay for your insurance plan yearly so you only have one payment deadline to keep track of. As mentioned previously, if you are at risk of non-payment, get ahead of it by calling your insurance provider and informing them of your struggle. They might be willing to work out a new payment schedule with you.

Ensure your car is in good condition

Keeping your car in good condition and having it maintained regularly is another tip if you want to avoid having your policy cancelled. Otherwise, if a loss occurs and an insurer decides that it was caused by negligence or a failure to maintain, they could deny your claim. So make sure to change the oil and check your car’s tire pressure regularly.

Keep your car safe at all times

Making sure that your car is safe and secure at all times is another tip for avoiding a policy cancellation. If a loss occurs and your insurance company finds out that it was caused by a lack of safety on your part - for instance, if you accidentally left your vehicle unlocked or left the keys in the ignition - they are within their rights to deny your claim. So take extra precautions to keep your car safe, like equipping it with an anti-theft device and making sure the doors are locked and the windows are up whenever you are leaving it unattended.

Informing your car insurance provider about changes

If your circumstances have changed, such as you moved to a new home or bought a new car, you must let your insurance company know as soon as possible. If the change is occurring in the middle of your policy term, your provider may make a mid-term adjustment. Depending on the change, your insurance premium may go up or down.

What happens if an insurance company invalidates my car insurance policy?

As a policyholder, you might be wondering what happens when an insurance company invalidates your car insurance plan. No matter the reason - whether it’s fraud, misrepresentation, or driving under the influence - the result can be the same: your car insurance policy being cancelled. If this happens to you, it’s important to know what the repercussions will be. Beyond losing your coverage, the following may happen to you:

Increased car insurance premiums

One of the most common consequences of a car insurance policy being invalidated is that when you purchase a new policy in the future, it will likely be more expensive. Policy cancellations make you a higher risk driver, and the riskier you are, the more your insurance premiums are likely to be. In some cases, you might even be deemed a high-risk driver, which not only translates to more expensive rates but may also make it difficult to qualify for coverage in the future.

Repossession of a financed or leased vehicle

If your car is leased or financed and your policy is cancelled, it may be at risk of repossession. This is because many lenders or leasing companies stipulate that drivers must have valid auto insurance policies for the duration of the lease agreement. For the insurance policy to be valid, it usually needs to meet the minimum coverage requirements of the province you live in, as well as additional coverage like collision coverage. Thus, if your policy is invalidated and your lender finds out, they could repossess your vehicle.

Driver’s licence suspension

Since car insurance is a legal requirement throughout Canada, if an insurer cancels your policy, they may notify your province’s Ministry of Transportation. Thus, one of the most serious outcomes of a car insurance policy cancellation is that it could lead to an automatic suspension of your driver’s licence. In other words, you would not be able to legally drive until you obtained a new policy.

A lower credit score

One final repercussion that may come with an invalidated car insurance policy in Canada is that your credit score may be lowered. This is usually the case if you have an outstanding balance with your insurance provider at the time of the cancellation, such as if you were cancelled for non-payment. Should this situation arise, your insurance company may notify a collection agency, and your credit score could be affected as a result. A low credit score can have several long-term consequences far beyond car insurance. For example, a poor credit score could make it more difficult to take out a credit card or qualify for a mortgage loan or line of credit. Please note that most incidents, such as insurance policy cancellations, remain on your credit report for seven years.

Contact BrokerLink to learn more about car insurance invalidation

Are you worried that your car insurance coverage may be invalidated? Get in touch with BrokerLink today. We can explain when and how car insurance policies can be cancelled by your insurer, as well as review your insurance contract to confirm whether you are at risk of cancellation or not. As a full-service insurance brokerage with an entire team of in-house car insurance specialists, we can also help with tasks like renewing car insurance or helping you find a policy that features the mandatory coverage types in your province, like accident benefits coverage. Contact BrokerLink today for all your car insurance needs, or use our online quote tool to request a free auto insurance quote in minutes.



What happens if my car insurance policy is invalidated?

If your car insurance policy is invalidated, your insurance provider is likely to deny any existing claims, meaning you would be forced to cover the cost of the loss out of pocket. Beyond denying your claim, your insurer may also cancel your policy outright, leaving you without coverage. In this instance, you would have to purchase a new car insurance policy from a different provider as soon as possible to avoid a lapse in coverage. Note that driving without insurance is illegal, and if caught, you could face fines worth tens of thousands of dollars, as well as the suspension of your driver’s licence, your vehicle being impounded, and even jail time, depending on the province.

If my car insurance policy is cancelled, will my insurer issue me a refund?

If your insurance company cancels your car insurance policy, they may issue you a refund, though it depends on the insurer and the terms of your contract. Some insurance providers offer a partial or full refund when they invalidate a policy. However, it depends on the circumstances surrounding the cancellation. Contact your insurance agent for more information on the fees that may come with policy cancellations.

If you have any questions, contact one of our local branches.