Car Insurance Renewals: How to Avoid Getting Gouged

By Arthur Dubois | Published on 25 Nov 2022

Car Insurance Renewals

It’s no news that auto insurance is mandatory in Canada. However, most people pay little attention when getting a car insurance policy, especially when it comes to car insurance renewals.

Think of getting car insurance like going grocery shopping. Some people compare prices and try to get good deals, and others just pick the first item on the shelf.

Comparing car insurance policies can save you money. Even more so when renewing your car insurance policy. Here’s what you need to look out for when renewing your car insurance policy.

[Offer productType=”OtherProduct” api_id=”64e5e38f2bb7ed64e70ab286″ id=”172688″]

What Happens When Your Car Insurance Policy Expires?

This is how car insurance works in Canada. Car insurance policies usually cover you for a year and will expire when this period is over. When your car insurance coverage expires, the insurance company can decide to renew or cancel your insurance policy.

Your car insurance company may cancel your policy if you have consistently failed to pay your premiums. Other reasons for car insurance cancellation are excessive driving offences, tickets, collisions, or payment defaults.

Alternatively, your car insurance company might automatically renew your car insurance policy. When your insurer renews your car insurance, this could lead to a car insurance rate increase or decrease. In most cases, your car insurance rate remains the same. 

Your car insurance provider may allow you to pay the insurance rate in full or spread the insurance payments over the months in your coverage period. 

How to renew your car insurance 

Generally, your insurance company will send a car insurance auto-renewal notice at least 30 days before your policy expires. You have the option to renew your car insurance with your current insurance provider or switch to a new insurer. 

If you ignore the renewal notice from your insurer, your car insurance will get automatically renewed either at your current policy terms or at new rates. 

The terms of your car insurance policy can change for various reasons such as moving to a new province, increasing or reducing your commute and mileage, including an additional driver to your policy, or previous claim history.

Renegotiating your car insurance policy is also a great way to save on insurance costs. All you need to do is call your insurance provider or broker and negotiate better rates, especially if you have a supporting reason to do so, like proof of a clean driving record.

In rare cases, your car insurance company can decide to terminate your policy and not automatically renew your car insurance. 

Switching car insurance companies before insurance renewal

Can you switch car insurance providers while your coverage period is still active? The answer is yes. You can cancel or change your insurance policy at any time. However, you may be subject to cancellation penalties depending on your insurance provider and policy. The more time you have left in your insurance coverage, the more your cancellation penalty may be.

If switching your car insurance results in overall savings, then it may be worth it. After all, what matters the most is you are saving money on car insurance costs.

Call insurance companies to get a car insurance quote, or simply use online quote generators to get an estimate. Research car insurance companies to assess the ease of claim processes. You do not want to be stuck with an insurance company that has a lengthy or ineffective claims process. 

Changing car insurance providers can be a good way to get better insurance rates. Compare car insurance rates and coverages across companies to choose a cheaper and similar coverage plan for your vehicle. 

Some employers or professional associations provide car insurance benefits. If your employer or professional body gives you access to lower car insurance rates, you can switch to the participating car insurance company to cut costs and save more money.

Factors that can impact your car insurance rate

Your driving history

Generally, having extensive driving history without driving violation tickets, accidents, or claims can lead to lower insurance rates. When getting your car insurance, the insurance provider may ask if you took official driving training. If you had professional driving training, you may get a better insurance rate.

Previous claims

If, due to car collisions, you have needed to claim car insurance, this may impact your insurance rate. The insurance company may assess you as a higher risk or simply try to recoup claim payments. 


Some provinces and cities have higher car accident rates and car-related crime incidences or experience more unruly drivers. Insurance in cities with higher risks of accidents or car theft usually comes at higher rates. 

Car make & model

The type of car you insure can impact your insurance rate. There are speculations that a car’s colour can drive up insurance rates. While people assume this is due to a higher probability of theft for such cars, there is no founded evidence that this is in fact true.

However, the value of a car and the potential replacement cost of the car can determine if your insurance rate is high or low. 

Providing updates for your car insurance

Renewing your car insurance is an opportunity to assess your car’s use and update your insurer on certain changes. Not updating your car insurer on certain changes can affect your future claims. You do not want a situation where the insurance company rejects your claim due to changes not in the records or new information not considered in the car insurance policy.

If, due to periods of inactivity, you use your car to commute less, you should contact your car insurer to inform them. This can drive down your car insurance costs.

Additionally, changing your address requires a car insurance update. If you had to relocate due to work or other reasons, you need to inform your car insurance provider and provide your new location address and postal code. 

Changes in the use of your car will impact your insurance rate. If you use your car for business, such as delivery services or travelling to work sites, you need to provide this information to your car insurance provider.

In many cases, extended use of your car by another party not listed in the car insurance policy requires a car insurance update. For example, if your family member starts driving your car frequently, or there is an unofficial change in car ownership among family members, it is important to inform your car insurance provider and make any required changes to your policy. 

Modifications to your car, such as a car enhancement, or major body work can impact the appearance and value of your car. This is important information to provide to your car insurance provider. 

Types of car insurance coverage when renewing your policy

When renewing your car insurance, it is important to review the coverage in your policy.

Mandatory car insurance includes liability and accident benefits injury insurance which covers injury or death caused to other people or their properties and your own medical expenses or loss of income due to an accident.

Optional insurance includes collision insurance, which covers the cost of repairing or replacing your vehicle in the event of a collision. You can also get comprehensive insurance to cover the cost of repairing or replacing your vehicle due to damages other than a collision, such as theft, fire, or criminal activities. 

Your total coverage will impact how much insurance rate your insurer charges. If you are changing your insurance company, ensure you get at least the same type of coverage for cheaper or you may not be getting a good deal.

Arthur Dubois is a personal finance writer at Hardbacon. Since relocating to Canada, he has successfully built his credit score from scratch and begun investing in the stock market. In addition to his work at Hardbacon, Arthur has contributed to Metro newspaper and several other publications