My insurer terminated my contract
Has your insurer decided to terminate your insurance contract before its expiration date? Or has the insurer decided not to renew it at renewal time? Here are the reasons that could lead to such a decision, how the insurer must proceed, and what you should then do.
An insurer may cancel any automobile insurance contract, without any justification, within the first 60 days of the contract. The insurer must advise you in writing and the cancellation will have effect 15 days after the notice has been received1.
From the 61st day of the contract onward, the insurer only has the right to terminate your contract for the following reasons:
- Non-payment of the premium
- A significant aggravation of the risk
The insurer must send you a written notice and the cancellation will have effect 30 days after the notice has been received.
In the event that the automobile insurance contract is not renewed, the insurer must notify you or your broker in writing at least 30 days before the contract expires. The contract will end at the expiration date.
The insurer may cancel your home insurance contract at any time without having to provide any justification. However, the insurer must advise you in writing. The contract will be end 15 days after the notice has been received3.
The insurer usually sends a notice of non-renewal 30 days before the expiration date. That said, the law does not specify any particular mechanism nor any specific deadline to do so.
Prorated premium reimbursement after cancellation
In all cases, you only pay for the period during which your insurance policy was in force. The insurer will have to reimburse you for any overpayment of premium4.
The role of your damage insurance broker
If you dealt with a broker to purchase your insurance and the insurer cancels or does not renew your contract, this does not mean that your broker’s mandate has ended. The broker must:
- transparently notify you of all the information pertaining to your file as quickly as possible;
- explain to you the steps he will be taking;
- present you with the various options that are now available.
However, your broker may not be able to find you a new insurance contract. If this is the case, he will send you an end-of-mandate letter.
Consequences for the insured
If the insurer cancels or does not renew your insurance contract, it may have serious repercussions on you, in terms of your home or your car insurance.
Trouble finding an insurer: Certain insurers may tolerate an interruption in insurance coverage lasting one or several days, while others may refuse to insure you. It may take several tries before you find an insurer that will agree to insure you.
Premium increase: In general, expect a higher premium.
Reduction in coverage: Your new insurer could impose more limits or simply refuse to insure you for certain risks like water damage. With respect to automobile insurance, you might no longer have access to all the types of coverage generally offered.
What should I do?
- Ask your current broker to shop around for another policy.
- Go shopping yourself: contact another insurance brokerage firm or communicate directly with another insurer.
- Whatever steps you take, disclose that the insurer cancelled or did not renew your previous contract. As an insured, it is your obligation to tell the truth (in french only) and disclose all information that could be relevant to your new insurer.
For automobile insurance: If you are unable to find insurance, contact the Groupement des assureurs automobiles (GAA), which provides assistance and support to consumers who are having difficulty purchasing automobile insurance coverage.
Access to automobile insurance
In Quebec, anyone who owns and operates a vehicle in the province must purchase a liability insurance contract5. Passenger cars must have a minimum of $50,000 in coverage. Off-road vehicles such as snowmobiles and ATVs must have at least $500,000 in coverage.
This means that if your insurer terminates your automobile insurance contract, it is absolutely essential that you be re-insured before getting back on the road.
A broker whose client has mandated him to find or renew an insurance contract for him can terminate this mandate. To do so, the broker must send a letter to the insured, notifying him of the situation and its consequences.
If you have received an end-of-mandate letter, you can contact the broker and ask him to explain the situation to you in detail. Do not hesitate to ask him about the potential consequences of ending the mandate. For example, does this also mean that your current insurer will no longer be able to insure you? If this is the case, you must find a new insurance contract as soon as possible. You can contact another insurance company directly or do business with another brokerage firm. The broker must facilitate the transfer of your file.
Brokers who end their mandate must have reasonable grounds for doing so, such as:
- being unable to find a contract for the client;
- the client losing confidence in the broker’s services;
- having a difficult relationship with the insured;
- being in a situation that gives the appearance of a conflict of interest;
- the insured failing to pay the premium or fees.