How to Cancel Your Car Insurance in Canada?

By Baggio Ma | Published on 27 Jul 2023

A person sheltering from rain under an umbrella.

    Luckily, cancelling your car insurance in Canada is not a complicated task. There is a long list of reasons for cancelling your car insurance, but the key thing to know is that you can cancel it at any time. You do not need to wait for your current insurance policy to expire, although doing so might trigger early cancellation fees. If you are considering cancelling your car insurance in Canada, this article will discuss how and when to do it, and how much cancelling your car insurance early will cost you. 

    Why Do Canadians Cancel Car Insurance?

    There are a number of reasons why Canadians look into cancelling their car insurance. The obvious reasons are if they are selling their car or trading their car in at a dealership. Either of these transactions requires you to cancel your existing policy. 

    This was quite common during the pandemic as Canadians shifted to a remote work environment. With far less commuting, many families have been able to reduce the number of vehicles for the household.

    Another obvious reason: if you move to a different Province or country. In Canada, car insurance policies are usually provincially managed. If you do move outside of the Province, you will most likely need to find a new insurance provider!

    There is also a good number of Canadians who actively shop around to get the best possible price for their car insurance. If you find a better price and want to lock that rate in, you will need to cancel your existing policy. Be aware that there could be some cancellation penalties from your insurance provider. If you’re lucky, your new provider will be willing to help you cover some of those costs for transferring!

    Finally, in 2023 Canadians have been challenged with rising interest rates and housing costs. For those who do not require a vehicle for commuting to work or to run errands, cancelling their car insurance provides nice monthly savings. You also save on gas and maintenance costs when you aren’t driving your vehicle on a daily basis. 

    Can I Cancel My Car Insurance at Any Time?

    Yes, you can always cancel your car insurance in Canada at any time during your policy. Of course, the easiest time to cancel your insurance is at the time of renewal. 

    The one thing to worry about when cancelling your car insurance early is the early cancellation fees. Most insurance providers do have an early cancellation clause in the policy. If you are thinking about cancelling, make sure to read the fine print first!

    Once you have contacted your insurance broker, they will likely hit you with a cancellation penalty. How is this calculated? It is determined by how much of your current policy is left and the value of your remaining insurance payments. Each company will calculate this differently, so again, refer to your insurance provider’s policy before cancelling. If the fees are too high, it might not even be worth it to cancel your policy early. 

    How to Cancel Car Insurance in Canada

    So have you finally decided that it is time to cancel your car insurance? There are a few things you’ll need to do to finalize this agreement. Here is our step-by-step guide to cancelling your car insurance in Canada in 2023.

    Have Your Next Car Insurance Policy Ready

    In Canada, you simply cannot drive without being covered by a car insurance policy. If you are caught driving without insurance, you can be subject to a hefty fine and even criminal charges. You do not want to deal with any lapse in coverage between the two policies. Always have your next car insurance policy ready before cancelling your first one. 

    Contact Your Insurance Provider

    When you are ready to cancel your insurance policy you must contact your insurance provider. Not only will they need to do the work to cancel your current policy, but you will likely be subject to an early cancellation penalty. You will need to advise them of your plans to cancel otherwise your insurance provider could continue charging you each month until your current policy ends. 

    Pay Any Fees or Unpaid Balances

    When leaving your insurance company you want to be on good financial terms with them. This means ensuring that you pay any cancellation or administrative fees for cancelling your policy. In addition to this, you will want to make sure that any unpaid balances are cleared up and paid off. The last thing you want is for the insurance company to send a collection agency after you. This could also impact your credit score if you ever let it get to this point. 

    Receive Confirmation of Your Policy Cancellation

    You always want to get the confirmation of your cancellation in writing from the insurance provider. Not only does this confirm that your original policy has been terminated but it provides you with proof in case you are wrongfully billed after the fact. If you pay your car insurance annually, you will also be entitled to a refund minus any cancellation or administrative fees. 

    Cancelling Car Insurance in Each Province

    As with most things in Canada, the auto insurance industry varies from province to province. For example, in British Columbia, Manitoba, and Saskatchewan, car insurance is managed by the Provincial governments and there is no private car insurance. The rest of the Provinces all have private insurance providers. No matter which Province you live in, it is illegal to operate your vehicle without auto insurance. 

    This also directly impacts the way car insurance cancellation is handled in each Province. Every Province has a Provincial regulator that oversees the car insurance industry, whether it is public or private. If you are wondering how your Province deals with early cancellation of car insurance, we have you covered:

    Province What Happens When I Cancel My Car Insurance?
    Alberta:
    Automobile insurance | Alberta.ca
    Albertans will need to reach out to their policy issuer to cancel their car insurance. Cancelling a policy means there will be early cancellation fees to be paid, even if you are set to receive a refund of overpaid premiums for the year. 
    British Columbia: 
    Cancel your insurance
    Advise your ICBC Autoplan broker immediately. The sooner you cancel your policy, the more you could get back as a refund. Cancellation fees apply based on the time remaining on your policy or any outstanding debt or fees. 
    Manitoba: 
    Cancelling your insurance
    Once you have cancelled your car insurance in Manitoba, you will receive a refund of any outstanding balance. This is calculated using short-rating, which accounts for fees and broker commissions over a shorter period of time. Note that in Manitoba you must send a signed letter and a copy of your new policy to Autopac Insurance. 
    New Brunswick:
    Automobile Insurance | New Brunswick Financial and Consumer Services Commission (FCNB)
    Just as with other Provinces, advise your private auto insurance provider to cancel your policy. Expect early cancellation fees which are based on the remaining term of your policy and any other administrative fees. 
    Newfoundland:
    Insurance Requirements – Digital Government and Service NL
    Nothing is out of the ordinary here: you will need to pay an early cancellation fee in Newfoundland. The cost of the fee will depend on which private insurance company you use. 
    Nova Scotia:
    Auto Insurance | Nova Scotia Utility and Review Board
    Policies across the Atlantic Provinces are all very similar and Nova Scotia is no different. Advise your private insurance broker of your desire to cancel. Expect to pay early cancellation fees for cancelling your policy. 
    Ontario
    Auto Insurance | Financial Services Regulatory Authority of Ontario
    The most populous Province in Canada also uses short-rate formulas to calculate the car insurance refund. You will also need to pay a cancellation fee for ending your policy early. 
    Prince Edward Island:
    Insurance Regulation | Government of Prince Edward Island
    In PEI, early cancellations of auto insurance are met with penalties and fees. As with other Provinces, these fees are based on how long you have left on your policy. 
    Quebec 
    How to cancel your auto insurance contract ? | AMF
    In Quebec, you will need to send a signed letter to your insurer. Your policy will not be considered cancelled until your insurer receives that letter. You will also not receive any overpaid premiums until you pay the early cancellation fees. 
    Saskatchewan
    Rates – SGI
    Saskatchewan auto insurance is public which means that it is regulated by the SGI or Saskatchewan Government Insurance. To cancel your policy in Saskatchewan, the SGI requires you to go through the broker who issued it. The usual cancellation fees will apply for early termination of your policy.  

    Can a Car Insurance Company Cancel My Insurance?

    Yes, a car insurance company can absolutely cancel your policy at any time. Generally speaking, you will receive a letter in writing or a phone call to notify you of the cancellation. 

    Why would your insurance company cancel your policy? There are several reasons why which include providing false information, making fraudulent claims, and not paying for your insurance. Depending on the reason why it was cancelled, you might also find it difficult to get insurance from another company in the future. If you need to drive in Canada, make sure you pay your car insurance on time. 

    The Bottom Line: How to Cancel Car Insurance in Canada

    If you need to cancel your car insurance in Canada, you’re in luck, you can do it at any time. Of course, this comes with the expectation of paying an early cancellation fee. Every Canadian driver needs car insurance so it is best to stay up to date with your policy and know exactly what will happen if you ever need to cancel your insurance. 

    FAQs About Cancelling Your Car Insurance Policy in Canada

    How to cancel my car insurance without charges? 

    The best way to cancel your car insurance without charges is to cancel on your date of renewal. This will ensure that you are not charged any cancellation fees for cancelling your policy before it is over. 

    Can I cancel my car insurance anytime?

    Yes, in Canada you can cancel your car insurance at any time. The caveat is that you will most likely have to pay a cancellation fee. If you paid your insurance annually, then you will receive a refund for the remaining months minus any cancellation fees that the issuer charges.

    How much does it cost to cancel my car insurance? 

    This depends on how much time is remaining on your policy. Insurance companies in Canada usually have a cancellation fee of about 3.0% to 7.0% depending on the issuer. You are also likely to get charged a higher fee if there is a significant amount of time left on your policy, and less if you are near the end of it. 

    Can I cancel my car insurance before it starts?

    If your policy is set to start as of a certain date, then yes you can cancel it before it even starts. Normally, when you buy car insurance or renew your insurance, you will need the policy to be effective immediately, otherwise, you cannot drive. 

    Can I cancel my car insurance if I’m not driving? 

    Yes, if you find that you are not driving anymore then you can cancel your car insurance. If you are driving less frequently, then you can consider modifying your policy to one with a lower cost. 

    Can I cancel my car insurance online? 

    Most insurance issuers in Canada will not let you cancel your car insurance policy online. To cancel your car insurance you will need to either visit your issuer’s office in person or call them over the phone.

    Can I cancel insurance on a financed car? 

    No, you must have insurance on the vehicle if you are still financing it. Most dealerships will consider this a breach of contract and even charge you for the whole insurance policy. Even if you are not driving the car, you will need to insure it according to the details in your contract. 


    Can I cancel my car insurance after an accident? 

    Yes, you can cancel your car insurance at any time, even after an accident. Some people seem to think that if they cancel their insurance right away, the premiums and cost of the policy won’t go up. Remember, as long as you need to keep driving, you will need to have car insurance on your vehicle. 

    Can my car insurance company cancel my policy? 

    Yes, your car insurance company can cancel your policy at any time. There are several reasons why they would cancel it including providing false information, fraudulent claims, and of course, if you fail to pay for it. 

    Do I get my money back if I cancel my car insurance? 

    Yes, if you paid your car insurance annually then you are entitled to the remainder of your balance minus any cancellation fees. This means that the amount you get back will almost always be less than the amount you paid. 

    Does cancelling my car insurance can hurt my credit score?

    Generally not since having car insurance does not impact your creditworthiness. The only time cancelling your car insurance can hurt your credit score is if you have an outstanding and unpaid balance with the insurance issuer. 

    Baggio Ma has written for several Canadian websites on a variety of personal finance related topics. His knowledge is informed by his personal financial journey as an investor over the past 5 years. He invests using the online brokerage platform Wealthsimple, shops with one of the best credit cards in Canada, and keeps track of his credit score through Borrowell.