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What Happens When You Miss a Car Insurance Payment in Ontario?

By Arthur Dubois | Published on 21 Sep 2023

car insurance

    As a responsible car owner, it’s crucial to understand the implications of missing a car insurance payment in Ontario. Auto insurance is not only a legal requirement but also provides financial protection in case of unfortunate events. By having a firm grasp of the consequences of missed payments, you can make informed decisions and mitigate any potential issues that may arise.

    The Immediate Impact of Missing a Car Insurance Payment in Ontario

    Missing a payment can have immediate consequences. Your insurance provider may issue a cancellation notice if you fail to pay by the due date. They can cancel your policy if you miss a payment and fail to catch up on the missed payment. In Ontario, according to the Ontario Automobile Policy, insurance companies will notify you in person, in writing or by electronic means if they intend to cancel your policy because of a missed payment. The timeframe for making the missed payment and paying the administration fee depends on how the company notifies you.

    NotificationTime to pay
    In person10 days 
    In writing by registered mail30 days when the notice is sent to your last known address by registered mailThe 30 days begins the second day after the notice is sent by registered mail
    In writing by prepaid courier10 daysThe 10-day period begins the day after there is a record of the person who delivered the notice that they sent the notice
    Electronic means10 days’ notice, which starts the day after the electronic notification is sentThe customer must have consented to receive electronic notices

    So, what does receiving a notice of cancellation mean? These notices explain that your insurer will cancel your policy if you don’t make your missed payment and pay the administration fee by noon of the last business day before the last day of the notice period. 

    If you make your payment before the expiry date, keep a record of your payment with the notice you received from the insurance company. Your payment record proves you paid your arrears, and your policy should still be valid. You should also ask the insurer for documents showing you made your payment and your policy is in good standing.

    What Happens if my Policy is Cancelled?

    Missing a payment that results in a cancellation of your policy doesn’t absolve you from the financial responsibility for any accidents or damages that occur during the period of non-payment. If you were involved in an accident while your policy was inactive, you would be personally responsible for covering all costs, including property damage, medical expenses, and legal fees. Ensuring your policy is active is essential for your financial protection.

    You must make your payment by the due date to ensure your coverage is not terminated, leaving you without any protection. If this happens, you can ask your insurer to reinstate your policy. However, you may be required to pay a reinstatement fee. Your premiums could be considerably higher, and the insurer may require you to pay for your policy upfront rather than in monthly installments.

    It’s essential to deal with notices from your insurer immediately to avoid having your policy cancelled for any reason, including a misunderstanding. One Ontario driver received a $190 credit on her bill and believed it was an error when she received a notice to pay an additional $77.02 when her policy came up for renewal. She thought it was a mistake because she’d had a credit from the insurance company. Unfortunately, she didn’t realize her premiums had increased. The driver ignored the notice of cancellation from the insurer, and the insurance provider cancelled her policy. Getting another insurance policy may increase her premiums from $1627 annually to about $4,000 annually.

    If your insurer refuses to reinstate your policy, you’ll need to find another insurance provider. Finding another provider can be challenging because insurers have a record of the last three years of your payment history. Some insurers won’t want to extend coverage to drivers who don’t make their insurance payments on time. Insurance companies consider payment history when determining premiums, and a pattern of late or missed payments can be seen as a red flag, leading to higher rates or even denial of coverage.

    You can talk to an agent or broker to help you find an insurer if your policy is cancelled because of non-payment.  Some insurers specialize in high-risk drivers or drivers with policies cancelled for non-payment. Having a cancelled policy creates a gap in your insurance coverage. Insurers will want an explanation of why there is an insurance gap. It’s very important to be honest with potential insurers about why your policy was cancelled. 

    Effect on Credit Score

    Missing a car insurance payment can hurt your credit score. Insurance companies typically don’t report late or missed payments to credit bureaus. However, if your insurance arrears go into collections, the collections will show on your credit report and can significantly reduce your credit score.

    A lower credit score can make obtaining favourable interest rates on loans, credit cards, or even securing housing more challenging. It’s crucial to maintain a good payment history to protect your creditworthiness.

    The Long-Term Effects of Missed Payments

    While the immediate consequences of missed car insurance payments are problematic, it’s essential also to consider the potential long-term effects of lapses in payment.

    When you miss car insurance payments, the impact goes beyond immediate inconvenience. Let’s explore some long-term consequences of not staying current with your insurance premiums.

    Increased Insurance Premiums

    Missing car insurance payments can increase insurance premiums in the long run. Insurance companies may view missed payments as a sign of financial instability, resulting in higher rates in subsequent policy terms.

    Imagine this scenario: you miss a few car insurance payments, and when it’s time to renew your policy, you find yourself facing significantly higher premiums. These increased costs can strain your budget and make you susceptible to further missed payments.

    By consistently making your insurance payments on time, you demonstrate to insurance providers that you are a reliable and low-risk customer. A good payment record can help you maintain affordable premiums and avoid unnecessary financial strain.

    Remember, staying on top of your car insurance payments is not just about meeting your immediate obligations. It’s about protecting your financial future and maintaining a healthy credit score. By prioritizing regular payments, you can avoid the long-term consequences of missed payments and ensure your financial stability.

    How to Handle a Missed Payment

    If you find yourself in a situation where you have missed a car insurance payment, it’s essential to take immediate action to correct the problem. Proactively addressing the situation can help reduce any negative consequences.

    Communicating with Your Insurance Provider

    As soon as you realize you’ve missed a payment, reach out to your insurance provider. Explain the situation honestly and inquire about your options for making the missed payment to avoid a lapse in coverage.

    Insurance companies may offer a grace period or alternative payment options to help you catch up. Open and honest communication can go a long way in resolving the issue and maintaining the continuity of coverage.

    Preventing Future Missed Payments

    While promptly handling a missed payment is crucial, taking proactive steps to prevent future occurrences is equally important. You can maintain a solid payment record and avoid unnecessary stress by implementing a few simple strategies.

    Budgeting for Your Car Insurance

    A well-planned budget is vital for managing your finances effectively. By allocating funds specifically for your car insurance premiums, you can ensure that you are consistently meeting your payment obligations without any financial strain.

    Review your budget periodically to ensure your car insurance premiums align with your financial goals and capabilities. Adjusting your budget as needed can help you avoid missed payments and the subsequent consequences.

    Work With Your Agent or Insurer to Reduce Your Premiums

    Have an agent or broker review your coverage to see if there are ways to reduce your premiums. Sometimes, brokers can shop the market and find a similar policy at a better rate with a different provider. In other cases, you may be carrying more insurance than you need. A broker or agent may be able to find ways to reduce your car insurance costs to make your payments manageable.

    Pay Your Annual Premium Upfront

    If you have the cash available, there are advantages to paying your insurance premium in one lump sum. Insurers sometimes give a discount when you pay upfront, which reduces your costs. It also eliminates the need for you to manage monthly payments.

    Automating Your Payments

    Consider automating your car insurance payments through pre-authorized debit. This way, your premiums will be deducted automatically from your bank account or credit card on the specified due dates, eliminating the risk of forgetting or missing a payment.

    Setting Up Payment Reminders

    To avoid missed payments in the future, consider setting up payment reminders. Many insurance providers offer online platforms or mobile apps that allow you to receive notifications before your premium due dates. Taking advantage of these tools can help ensure you never miss another payment.

    Missing a Car Insurance Payment in Ontario: The Bottom Line

    By understanding the implications of missing a car insurance payment in Ontario, you can take the necessary steps to prevent and address missed payments.  As a driver, it is essential to have an active insurance policy that meets your needs. It’s critical to ensure your policy isn’t cancelled for any reason, including non-payment. Prioritizing regular payments and open communication with your insurance provider will help you navigate any challenges that may arise, ensuring continued coverage and peace of mind on the roads of Ontario.

    FAQs About Missing a Car Insurance Payment in Ontario

    Can you miss a car insurance payment and get away with it in Ontario?

    You cannot miss a car insurance payment and get away with it in Ontario. If you miss a payment, you will receive a notification that your policy is in arrears and will be cancelled if you don’t make your outstanding payment and pay the administration costs. 

    Does missing a car insurance payment hurt your credit score? 

    Missing a car payment typically doesn’t hurt your credit score unless the overdue payments go to collections. Once in collection, it will be reported to the credit bureau, and the effect on your credit score can be damaging.

    What happens when you miss a car insurance payment when renewing your policy?

    Your premiums could increase significantly, or if late and missed payments have been an ongoing problem, your insurer could refuse to renew your policy. Late payments will be in your insurance history and can affect your premiums for several years.

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    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