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The Importance of Keeping Your Car Insurance Policy Current -

June 13, 2013

By law, all motorists are required to have a valid car insurance policy in place at all times. This is to ensure that in case of an accident, motorists, passengers and pedestrians are protected medically and financially. An uninsured motorist is a threat to every Canadian on the road. Many uninsured drivers have found themselves confronted with financial ruin due to the crushing responsibility that comes with expenses that have resulted from an auto accident.

While it is expected, maintaining a valid insurance policy isn't always the case. Things can happen. Financial strife can prevent or stall payments. People forget to make a payment. There are even instances of consumers changing banks and forgetting to move the automatic payment over, resulting in missing premiums. Suddenly, a policy cancellation comes in the mail.

Regardless of the circumstances, lapsed coverage is in no one's best interest. In a number of ways, it can hurt you both now and over time.

The Search for Decent Car Insurance

Even without a recession and financial strife, it can be difficult to find decent auto insurance quotes that don't dramatically impact your budget. You may decide you need to change your insurer. This does not mean you should start missing payments. First, you risk a cancellation, which will hurt you. Second, any new insurer will want to know how long you have had continuous coverage.

If there is a cancellation or a gap, it can have an impact on any new rates offered. Customers with good insurance standing are at the advantage here. They already have a deal and, to get that customer's business, insurers will have to offer a better rate.

Under no circumstance do you want to wait until after your policy has been cancelled to find a new insurer and/or better rate. While your coverage is in excellent standing is the only time to shop around for car insurance quotes. It's the best way to get the better rates.

Lapsed Payments

You could occasionally miss a payment or get it in late. This is especially true when you're on a monthly plan. Now, this won't necessarily be an issue as long as you remember and pay it ASAP. Most insurers bill out one month in advance. That means payment is for the following month, not the current one.

Now missing multiple payments or not paying a premium in full on time is definitely going to cause problems. There is a good chance you'll get a cancellation notice in the mail. The notice will be delivered by registered mail. In Ontario and most of Canada, policy conditions allow insurers to cancel your policy effective the 15th day after they've given you official notice. If you did receive a registered letter threatening cancellation of your policy, you would have to pay any owed monies within 15 days of receipt. If you do not, your policy will be cancelled.


Once your car insurance policy is cancelled for any reason, you are uninsured as of the cancellation date. Legally this means you should not drive at all. Unfortunately, many do not heed the rules. Otherwise we would never have an accident involving an uninsured motorist.

When an uninsured vehicle gets involved in an accident, there is no coverage. No insurance company is under any obligation to provide any type of coverage. This can be disastrous, especially if it's determined you're at fault. The driver is now completely responsible for all financial obligations that resulted from the accident, including injuries and property damage. This can be costly as insurance can cover medical expenses, out of pocket expenses, loss of wages, miscellaneous costs and more. It is highly unlikely any single motorist would have the financial resources to cover what an insurer can.

Avoiding cancellation has to be a priority for any and all motorists. Immediately upon receipt of a notice, bring policy payments current. If there is something that prevents you from making the payment - or if you're having problems making the regular payments - speak with your agent right away. Establish a way to reduce the premiums before you find yourself in the red zone. The cost of cancellation is not worth it.

Cost of Cancellation

A single missed payment will probably, at most, result in a late fee. This is only if the late payment is eventually made in a timely manner. If you do make arrangements with a new insurer before making that payment, it will still have to be paid. It won't matter if you start a new policy. If the previous insurer cancels you, you will still be considered uninsured. On top of that, the insurer will be able to bill you for each day you were covered without making the payment.

So, technically, you can't simply change policies and leave the old premiums unpaid. Also, that unpaid policy will end up with a collection agency and ultimately having an impact on your credit history and score. This will not only affect insurance rates down the line but, by involving your credit, create a whole new set of problems.

On top of the difficulties caused when the uninsured is involved in an accident, there are other risks. If you cannot prove to law enforcement that you have current coverage on request, you face a fine and violation. That ticket will have a negative effect on your premiums.


As you can see, only keeping your car insurance current and continuous can protect you. Do anything and everything in your power to make payments. If you want a better rate, shop around while you are in good standing with your current insurer. And above all else, do not drive if your policy is not in force.

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GetInsuranceQuotes Canada LTD. is not an insurance provider. It is an online service that offers auto insurance shoppers a means to find competitive car insurance quotes from a network of car insurance brokers and agents within the provinces of Ontario and Alberta of their participating intermediaries and providers.