Getting Car Insurance After Cancelled Policy

16 minute read Published on Aug 5, 2022 by BrokerLink Communications

How to deal with insurance cancellation.

Car insurance policies include pages of important details - from coverage to deductibles, and it’s important for policyholders to understand every aspect of their policy so they are prepared in the event of a claim. Most auto insurance policies spell out exactly what happens if you wish to cancel your policy early, however, what if the insurance company decides to cancel your coverage? How do you go about finding a new policy in the event of a cancellation?

Below, we outline your options if your insurance company informs you of a policy cancellation. Continue reading to learn more about the top reasons car insurance companies cancel policies, the long-term consequences of a cancelled policy, and how to find new auto insurance coverage post-cancellation.

Six reasons car insurance companies cancel auto insurance policies

When you purchase car insurance in Canada, you sign a contract with the insurance company. If either party fails to hold up their end of the bargain, the contract may be broken. However, an insurance company won’t cancel someone’s policy without good reason (at least outside of the initial 60-day window). Some of the top reasons that car insurance companies cancel auto insurance policies are non-payment, fraud, and misrepresentation.


Non-payment is the most common reason that auto insurance policies are cancelled. As the term suggests, non-payment is when a policyholder fails to make an insurance payment. If You skip an insurance payment, even if it’s just one, your insurance company will notify you that you have a set number of days to pay the outstanding balance (usually 15 days). If you fail to make the payment after the deadline has passed, the insurance company may cancel your policy.

Please note that even if the insurance company cancels your policy, you must still pay your bill. Specifically, you must pay for the period between your last monthly payment up to the point that your policy was officially cancelled (this period is what’s known as time on risk). Plus, you won't be able to buy a new auto insurance policy from another company until the balance is paid in full. For this reason, it’s best to settle your current debts before obtaining a new policy. If you are ever in danger of non-payment, contact your insurance company as soon as possible, to inform them about your inability to pay the next instalment on time - this can help avoid a policy cancellation.


A second reason that auto insurance companies cancel auto insurance policies is due to misrepresentation, which is when a policyholder withholds information or lies when applying for auto insurance. This is usually done to receive a cheaper rate. However, if the insurance company finds out that you misrepresented the truth, they could cancel your policy. An example of misrepresentation is failing to mention that other people will be driving the vehicle regularly (to avoid paying a fee for additional drivers) or hiding the fact that the vehicle is used for both personal and commercial purposes. Please note that non-disclosure or omission of truth count as misrepresentation, which is why policyholders should always tell the truth when applying for auto insurance.

Suspended driver’s licence

There are many reasons why the authorities may suspend someone’s driver’s licence. In the event your licence is suspended or revoked, your insurance company may cancel your auto insurance policy. If your licence is in danger of being suspended, contact your insurance company or broker right away.

A material change in risk

A material change in risk, also known as a change in situation, is another reason that auto insurance companies cancel insurance policies. An example of a material change in risk is if you are diagnosed with a medical condition that makes it dangerous to drive, such as problems with your vision. If a change in risk occurs, your insurance company can cancel your policy.


Similar to misrepresentation, fraud is another reason an insurance company could cancel your policy. Insurance fraud is when a policyholder files fraudulent claims or lies about the circumstances of a loss. To avoid having your policy cancelled due to fraud, always be honest with your insurance provider and never file an unwarranted claim.

Filing too many claims

One final reason that an insurance company in Canada might cancel your policy is because you file a large number of claims, especially if they are filed in a short time frame. Filing too many claims is a red flag to insurance companies as it indicates that you have been involved in an above-average number of incidents. This can lead to your insurer cancelling your policy and you being deemed a high risk driver, making it harder and more expensive to obtain auto insurance in the future.

What to do if you can't afford to make a auto insurance payment

Since non-payment is the most common reason that insurance companies cancel auto insurance policies, let’s dive into what to do if you can’t afford to make a payment. As you will see, having your policy cancelled is the last resort, which means you should do everything in your power to avoid cancellation. Keep reading to learn more about what to do if you know you can’t make a future payment or have already missed a payment by a few days:

If the payment due date has not yet passed

If your next auto insurance payment is not yet due, however, you know you will not be able to pay it on time, it's imperative that you contact your insurance company as soon as possible. If you contact them and inform them of your predicament in advance, you have a better chance of working out a new payment plan and avoiding cancellation. For example, the insurance company might agree to postpone payment or temporarily extend the due date until you can pay the bill. Believe it or not, insurance companies have the ability to offer a bit of leeway when it comes to payments, especially if you have a legitimate reason.

If the payment due date was a few days ago

Although it’s best to inform your insurance company of your predicament before the payment due date passes, you might still be able to have your policy reinstated if it’s only been a few days to a week since the due date. The period immediately following the instalment due date is known as the grace period. If you pay the amount missed within this time frame, the insurance company is not likely to cancel your policy, though the payment may be subject to a late fee. Before you reach this point, contact your insurance company or broker to find out the exact length of the grace period and the cost of the late fee.

The consequences of a cancelled auto insurance policy

The consequences of an insurance company cancelling your policy are serious. Whether due to non-payment, misrepresentation, or fraud, policy cancellations have long-term consequences like hefty fees and can lead to difficulty obtaining a new policy, described further below:

Driver’s licence suspension

Auto insurance is mandatory in every province and territory in Canada, and many regions require insurance companies to notify them if a driver’s insurance policy lapses or is cancelled. Therefore, if an insurer cancels your policy, it could result in an automatic suspension of your driver’s licence until a new policy is obtained. Since driving without insurance is illegal, you would not be able to get behind the wheel until you have a new policy.

More expensive auto insurance rates

When your auto insurance policy is cancelled, this goes on your record, making it more difficult to obtain a new policy in the future. Insurance companies reward drivers who pay their bills on time and have clean driving records. Policy cancellations make you a riskier investment, which can lead to higher auto insurance rates. In some cases, you may be required to purchase facility auto insurance - which is designed for high-risk drivers

Repossession of a financed or leased vehicle

If you drive a financed or leased vehicle, it could be in danger of repossession if your insurance policy is cancelled. This is because many lenders require drivers to maintain full coverage on their vehicle for as long as it is financed. If the lender finds out your policy was cancelled, they could repossess your car.

A lower credit score

One last consequence of a cancelled auto insurance policy is a lower credit score. If you have an outstanding balance with your insurance provider, the insurer could pass this information to a collection agency. In turn, this could impact your credit score, making it more difficult to take out loans, including a mortgage or credit card in the future. Most incidents remain on your credit report for seven years.

Top three tips to avoid having your car insurance policy cancelled

Due to the long-term consequences of cancelled auto insurance policies, avoiding cancellation is crucial. Luckily, BrokerLink’s expert insurance advisors have put together a list of tips to avoid having your policy cancelled below:

1. Tell the truth

Do not lie or omit the truth from your insurance company in an effort to obtain a cheaper rate. It may seem like a great way to save money, but if caught, there are serious consequences, including policy cancellations and hefty fees. Therefore, whether filling out an auto insurance application or filing a claim with your provider, always tell the truth.

2. Follow the rules of the road

BrokerLink’s second tip to avoid a cancelled car insurance policy is to drive safely by following the rules of the road. When you drive safely and responsibly, you are less likely to get into an accident, which means fewer claims. This leaves you in better standing with your insurance company, so in the event you weren’t able to make a payment, they might be more inclined to give you some leeway. Plus, when you drive safely and avoid infractions, your insurance premium will likely be lower.

3. Make payments on time

The last tip for avoiding a policy cancellation is to always make payments on time. If you frequently miss deadlines due to forgetfulness, set a monthly payment reminder on your phone or computer, or consider purchasing an annual policy with one payment due date, if feasible. In the event you can’t afford to make a payment on time, contact your insurance company as soon as possible (ideally before the payment due date or no more than a few days after). Notifying them in advance will increase your odds of them working out a new payment plan with you versus cancelling your policy altogether.

What to do if your insurance policy is cancelled

Despite following the tips above, there may come a time when your policy gets cancelled. If this happens to you, try not to panic. Your insurance company is required to give you advance notice of a policy cancellation. This notice will either be sent in the mail or sent electronically by email. The notice will detail both the reason for the cancellation and the cancellation time frame. Typically, cancellation due to non-payment requires 10 days’ notice, whereas cancellation for other reasons can be given up to 45 days in advance. Should you receive a notice of policy cancellation from your insurance company, you have two options. The first is to fight the cancellation by presenting your case to the insurance company, and your second is to accept the cancellation and find a new policy. We outline both options below:

Option one: make your case to the insurance company

If you think your insurance company is not warranted in cancelling your policy or you had a valid reason for the cause of the cancellation, you might decide to fight the cancellation. In an effort to have your policy reinstated, you will need to plead your case. To do so effectively, you must provide concrete proof that you are not a high risk driver. Proof varies considerably and largely depends on the reason for the policy cancellation. In general, the goal of making your case is to prove to the insurance company that you are a safe and responsible driver who is unlikely to file many claims in the future. As part of your case, you could also propose increasing your deductible (especially if most claims were under $5,000). You could even inquire about an alternative car insurance policy, like one tailored to high risk drivers, which would likely be more expensive but could help you avoid cancellation. Lastly, you may wish to highlight your loyalty and value to the insurance company over the years by detailing how much money you’ve spent with them (totalling all policies). Once you’ve presented your case, which can be done over the phone or in person, your insurance company will likely take a few days to review it. Upon review, they will either decide to reinstate your insurance policy or continue with the cancellation.

Option two: find a new car insurance policy

If you receive a car insurance policy cancellation notification from your insurance company, your second option is to find a new policy. This may be your only option if you were unable to successfully plead your case.

Whatever road led you to this place, finding a new car insurance policy is vital, especially since driving without insurance is illegal in Canada. Depending on the circumstances of your cancellation, finding a new policy might not be too difficult. For example, if the cancellation was due to you failing to disclose another driver, you can likely find a new policy easily, so long as you disclose all drivers this time. That said, if your policy cancellation was due to non-payment, fraud, or a driver’s licence suspension, you may not be able to find a new policy as quickly. In this case, you should contact a broker to discuss your options. They can let you know if you are eligible for car insurance from a standard provider or if you need to seek insurance from a provider specialising in high-risk drivers.

Driving without insurance is illegal in Canada

It’s important to remember that driving without car insurance is illegal in Canada. If you are caught breaking the law, you could face severe consequences. The consequences for driving uninsured vary by province but may include jail time, fines of thousands or tens of thousands of dollars, and a licence suspension. Plus, if you get into an accident while driving without insurance, you would pay for everything from legal expenses to medical fees and car repairs out of pocket. For this reason, it’s critical to obtain a new car insurance policy before your last policy is cancelled. Driving without insurance is not worth the risk and can lead to even more expensive car insurance in the future. To learn more about mandatory car insurance coverage in Canada, contact BrokerLink. One of our insurance advisors will be pleased to discuss the requirements in your Canadian province or territory, and help you find a new policy.

Facility insurance for high risk drivers with cancelled policies

As mentioned, if your insurance company cancels your car insurance policy, you might be deemed a high risk driver. If this is the case, facility insurance might be your only option. Facility insurance is the last resort for most drivers as it’s more expensive than standard policies. That said, it does provide a way for high risk drivers to obtain insurance, and without it, they wouldn’t be able to drive.

To find out the types of car insurance available to you, get in touch with BrokerLink. One of our insurance advisors will be pleased to review your case and offer an unbiased opinion on the right type of insurance for you. If an insurance broker from BrokerLink informs you that you are no longer eligible for standard car insurance (meaning no insurance company in Canada will underwrite a traditional auto insurance policy), they can connect you with an insurance provider that specialises in high risk drivers. Each insurance company has its own unwriting criteria, but all companies consider similar factors. A few of the most common reasons that an insurance company might deny you a standard policy include:

  • Multiple collisions resulting in insurance claims.
  • A high number of traffic tickets or fines.
  • Past policy cancellations due to missed payments.
  • Convictions arising from insurance fraud or misrepresentation.

Therefore, if your insurance company cancelled your policy, whether due to missed payments, misrepresentation, or fraud, you might be forced to purchase facility insurance. Though more expensive, it gives drivers an opportunity to continue driving and improve their record in the hopes of obtaining a standard (less expensive) car insurance policy in the future.

How does high risk car insurance work?

Similar to standard auto insurance, high risk car insurance can be purchased directly through an insurance company or via a broker. An insurance agent or broker typically only recommends this type of insurance when no other options are available.

In Ontario, facility auto insurance is provided by the Facility Association, an administrative office founded to guarantee that all drivers have access to insurance. That said, the Facility Association does not actually create or sell high risk policies. Rather, policies are offered via auto insurance companies, with the backing of the Facility Association. Provinces and territories across Canada offer high risk auto insurance to drivers.

The process of obtaining high risk auto insurance usually works as follows: A policyholder will apply for standard car insurance coverage (you may wish to apply for coverage from multiple insurance companies as they each have a unique set of criteria, and even if one denies your application, another may accept it). However, if insurance companies ultimately deny your application, you will need to apply for facility insurance. You can do so via an insurance broker, who can explain the policy options available to you. Once you’ve purchased a policy, it will be backed by the facility association in your province.

Steps to getting auto insurance after a cancelled policy

Finding auto insurance after a cancelled policy is harder than it sounds. Ultimately, even if you are not eligible for a standard car insurance policy, you will still be able to buy high risk or facility insurance. Keep reading to discover the steps to obtaining car insurance after a cancelled policy:

1. Contact an insurance broker

Kick things off by contacting an insurance broker. In fact, this is a great first step, whether your existing policy has already been cancelled or is in danger of being cancelled. The experts at BrokerLink can review your case and help you fight the cancellation, if applicable, or help you find a new car insurance policy. We also provide complimentary quotes to all customers.

2. We obtain and compare quotes on your behalf

After providing you with an obligation-free quote on your facility car insurance policy, one of BrokerLink’s insurance advisors will shop around on your behalf. We do this by obtaining and comparing quotes from the top insurance companies in Canada to determine which one has the best car insurance coverage at the most competitive rate. The final step is to choose one that’s right for you and to purchase it.

Contact BrokerLink for your next auto insurance policy

We have been in business since 1991, which means we have over 30 years of experience in the car insurance industry. Do you need an auto insurance policy?

Get in touch by phone, email, or in-person and speak with one of our knowledgeable and friendly insurance agents for help finding an auto insurance plan that meets your needs and budget.

Get started by requesting a free car insurance quote today. You can do so with ease using our online quote tool. We can’t wait to hear from you!

Get an auto insurance quote [phone]


Can my car insurance be cancelled?
An insurance company might cancel your car insurance policy for several reasons. Reasons may include non-payment, misrepresentation, fraud, a suspended driver’s licence, a material change in risk, or idling too many claims. Before your policy is cancelled, your insurance provider will notify you of the impending cancellation, and this notice will include the reason for the cancellation. If the reason is unclear, contact your insurance provider immediately.
Will my insurance provider pay for damage that I caused if my car insurance policy is cancelled?
If your insurance policy was active at the time of the accident, they usually still cover the cost of the damage. However, if your policy has lapsed by this time, the onus will be on you to pay for the damages.
What happens if I make a car insurance payment late?
If you miss a car insurance payment, your insurance provider may cancel your policy, especially if late or missed payments become a habit. However, if you pay the instalment only a few days past the deadline, you will likely still be in the grace period, allowing you to avoid a policy cancellation. That said, late payments may be subject to a late payment fee.
How long is the grace period before your insurance policy lapses?
Grace periods vary by the insurance company, which is why it’s crucial to read the fine print of your policy. If you are in danger of missing a payment, contact your insurance company or broker as soon as possible to confirm the grace period, as well as the late payment fee.
Do insurance companies reinstate cancelled auto insurance policies?
When you receive a cancellation notice from your insurance company, the first thing you should do is contact your broker, or the insurer. If your policy has lapsed for a short period of time, such as a week or less, they may reinstate it. Time is of the essence here, as is presenting your case to your insurer. When you contact them about reinstating your policy, try to show concrete proof that you are not a high risk driver and highlight your value as a customer.
What are the consequences of a cancelled car insurance policy?
There are many consequences of cancelled insurance policies. Some of the most severe consequences include the repossession of your vehicle (if financed), the suspension of your driver’s licence, expensive insurance rates in the future, and a lower credit score.
How much does high risk insurance cost?
The cost of high risk auto insurance varies from driver to driver.
Can I buy standard car insurance after a high risk car insurance policy?
Following a policy cancellation, you may be required to purchase facility insurance. However, this doesn’t mean you will have high risk auto insurance forever. If you avoid incidents and infractions, you may be able to successfully apply for a standard auto insurance policy once your high risk policy expires.

For more FAQs, visit the BrokerLink FAQs page.