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How to terminate your insurance contract

Both an insured and an insurer can ask to terminate an insurance contract, in other words, cancel it before its expiration date. Here are a few key points you need to understand if you wish to terminate your contract.

You want to cancel your insurance contract

​​​You may cancel your insurance contract at any time. However, you should be aware that this usually involves a penalty. The penalty is determined using the cancellation table appended to your contract. Generally, the further out the contract expiration date, the higher the penalty.

​​​Send a letter to your insurer notifying it of your decision to terminate the contract. Remember: if more than one insured is named on the contract, the letter must be signed by each one of them. Your contract ends as soon as the insurer receives the letter; do not hesitate to call the insurer to acknowledge receipt of your notification.

​​Changed your mind before the contract came into force?

Your insurance is coming up for renewal. You shop around and come to a verbal agreement with a new insurer who then mails you the contract. In the meantime, however, you change your mind and want to remain with your current insurer. Is it too late?

As long as the new insurance contract has not come into force, you may choose the insurer with which you wish to do business. To avoid cancellation fees, it is important to contact the new insurer to notify it of your decision before the date at which the contract comes into force.

Be aware, though, that if you dealt with an insurance broker to find a contract, the broker may charge you a fee.

The contract is entered into online

You can terminate a contract that was entered into online within 10 days of receiving it, without any penalty. To do so, you must fill in and send the insurer the notice of rescission in Schedule 1 of the Regulation respecting Alternative Distribution Methods. Then, make sure you obtain an acknowledgement of receipt from the insurer.

Stop paying the premium to cancel the insurance contract?

Has anyone ever “advised” you to simply stop paying your premiums so that the insurer will cancel your insurance? Although it is true that the insurer will terminate the contract, this is not without consequences. In fact, you could have difficulty finding a new insurer, it could affect your credit history, and you would still have an unpaid balance with the insurer. It is therefore much wiser—and very easy—to send a written notice.