• Insurance cancellation because of unpaid premiums: how does it impact you and your insurance coverage?

    5 April 2018Christopher Johnson

    Like most people, you are probably paying your automobile, home or business insurance through monthly automatic preauthorized debit payments. Do you, however, always have enough money in your account to cover your monthly premium payments? We regularly receive calls from people whose insurance contract has been cancelled because of unpaid premiums. It is common practise for insurers to terminate a client’s insurance coverage after one or several failed payments. In this article, Assurances Multi-Risques informs you of the possible consequences of having your insurance canceled for this reason.

     

    A few facts on car and home insurance following an insurance contract cancellation because of unpaid premiums :

    Let’s begin by saying that client management policies vary from one insurer to the other, and that some insurers are more tolerant than others. Some insurers will automatically void your insurance following one missed payment while others will wait for two or more such occurrences before taking action. Moreover, the length of time you have been insured with the provider and the nature and quality of your insurance record will also come into play in case of mishap. For those who choose to make a lump sum payment by cheque or by Internet transfer instead of monthly instalments, we suggest that you pay your premium immediately following the reception of your invoice in order to make sure that you don’t forget this important deadline. When an insurer cancels your contract, he will give you 30 days to find a new provider for your automobile insurance and 15 days for your home or business insurance. We assure you, however, that you never, ever want to find yourself in such a situation! Finding a new insurer in such a case is sure to be a complicated and trying affair.

     

    Is it true that my insurance premium will be higher afterwards ?

    Unfortunately, the answer is yes for all types of insurance. In fact, your premiums could double or even triple in certain cases. Since finding a new insurer following the cancellation of your insurance can be daunting, we suggest that you get in touch with an insurance broker who will help you to find a specialized insurer, i.e. a substandard insurer willing to offer you insurance coverage. Please be warned that there is only a limited number of substandard insurers to choose from in the industry. Depending on insurers, it will generally take you two or three years to clear your record of the non-payment incident.

     

    More advice :

    • We agree that having your insurance cancelled because you have missed payments is very unpleasant. You must, however, refrain from making false statements to your next insurer concerning your current situation since your background will be checked as soon as you make your next claim, and you could very well end up being denied coverage;
    • Avoid interrupting your insurance coverage. Contact an insurance broker as soon as you receive notice that your insurance contract has been canceled. If you wait until your insurance runs out before you find a new insurer, your new insurance premium will certainly be higher than if you had proceeded otherwise;
    • If you have an outstanding balance with your previous insurer, take care of the matter before he puts things into the hands of a collection agency as that will further damage your credit record;
    • Contact an independent insurance broker who will make sure that you are well informed.

     

    Lastly, make sure to closely track your automatic preauthorized debit payments. You will avoid many problems by doing so. In the event that your insurance is canceled because of unpaid premiums, contact an Assurances Multi-Risques broker who will counsel you and help you to find a new insurer.