Cancelled car insurance occurs in two ways. You can cancel a policy if you take your car off the road or sell it. This would have no impact on your ability to get coverage again at a later date, though you might incur fees for early cancellation. An insurance company may cancel your policy if you violate any of their underwriting rules, such as unpaid premiums, driving convictions or at-fault accidents. In this case, it may be difficult or more expensive to find coverage. However, the insurance industry is obligated to provide basic insurance to anyone qualified to drive. You will always have options, however, some of these may be very expensive.
Cancelling Your Own Policy
If you’re selling a car and not replacing it, cancellation makes sense. Be sure to contact your insurer to tell them you are cancelling. If you simply stop paying, then your policy could lapse, which may flag you as a risky driver, or your insurer may cancel your policy which has a similar effect on your future insurability. Any unexplained gap in coverage could trigger this.
In most other cases though, your best solution may be modifying your existing policy, rather than cancelling it completely. This way you avoid cancellation fees, and if you’re storing your car temporarily, comprehensive coverage could still protect you against theft or damage while in storage.
Insurance Company Cancellation
Your insurer can cancel your policy if you violate any of its conditions for coverage. Common reasons for cancellation are:
- Lack of payment
- Fraud – if you’ve misled your insurer about your personal or vehicle information and how it’s used, the insurance company can cancel your policy or refuse to pay out benefits.
- Major driving violations – serious charges such as impaired or reckless driving.
- Health issues – being diagnosed with seizures or other conditions that interfere with the ability to drive.
How to Obtain Car Insurance After Cancellation
The best first step is to seek a quote through a car insurance calculator, such as the one on this page. This calculator looks at over 30 different insurance companies and may provide you with information on companies that will provide you with insurance, and at the cheapest rates. Be sure to enter detailed information about your situation to obtain the most accurate results.
In the case of serious driving offenses, it’s possible that no company will offer a conventional policy. That driver would now be part of what’s called the residual insurance market – drivers who are otherwise uninsurable. All insurance companies are required to be members of the Facility Association, an administrator of insurance for the residual car insurance market. While the Association does not, in itself, offer car insurance, it works with member companies and residual market drivers to provide car insurance coverage. The Facility Association operates in these provinces and territories:
- New Brunswick
- Newfoundland and Labrador
- Northwest Territories
- Nova Scotia
- Prince Edward Island
British Columbia, Saskatchewan, Manitoba, and Quebec each have public car insurance plans or components and serve the residual car insurance market separately.
Because of the reasons why a driver is part of the residual market, premiums are high, very high, when compared with regular insurance, but may mean the only way a driver can legally operate a vehicle.