Oct 30

How to Cancel an Insurance Policy – the Do’s and Don’ts

I want out! It has come time to cancel your insurance policy – how exactly is it done?  Is it as complicated as the policy wordings?  Well – No!  It is actually pretty easy!  Of course, it’s a simple conversation if you have an easy-going insurance broker, otherwise it might come with a bit of resistance.  As a policy holder, you have the right to cancel, so here is some simple advice on what to do and what not to do when canceling your policy.

Cancellation of insurance policies is a fact of the insurance business and from time to time, clients will ask me to cancel their policies – sometimes due to the fact that I have found a better insurance solution for their needs, other times because the solution that worked at a certain point in time, is no longer working for them and yet other times because they don’t need coverage anymore.

First, you have to know that the regulations are stacked in your favour – For an insurance company to cancel your policy; they have to have registered letters giving ample notice that they are going to cancel the policy, reason and – if you owe money – a chance for you to pay it back and continue along on your merry way.

If you are going to cancel the policy, there are several ways to get it done. Here is an ideal way and a non-ideal way to cancel your policy:

As a consumer you can cancel a policy:

a)  In writing – this is the absolute best way to cancel a policy (for you and your broker) – it should contain the following information:

  • Insured’s name(s) – the name of the people that are insured under the policy
  • The policy number – (may be different than the account number – depending on the company)
  • The company that is insuring you
  • The date you wish the policy cancelled
    For example: In consideration of the return of unearned premium to follow if any, I hereby request cancellation of   ABC Insurance Company Policy No. ABC1234 and any renewal thereof and hereby release the said Company from Month Day Year. Your name(s) would appear at the bottom of the letter underneath your signature(s).
  • All policy holder signatures – everyone listed on the policy needs to sign consent

b)  Stop paying your premiums – Does the job but NOT A GOOD IDEA!

Your policy will be cancelled but the aftermath will be different for the type of policy that you have, for example:

  • Auto & Home insurance – cancelled for non – payment: Not good at all to have on your record – may affect premiums in the future
  • Business insurance – cancelled for non-payment – Would you do business with someone who doesn’t pay you – insurance companies don’t look too kindly on businesses that don’t pay their insurance bills – it is hassle they aren’t fond of.
  • Life insurance – not paying your premiums is actually one of the few ways your “in-force” policy can be cancelled – still it is better to cancel in writing – it really gives you a chance to think about why you are cancelling and perhaps to speak to a representative to get advice.

One thing you definitely cannot do is request a change or cancellation of your policy(s) by leaving a message on your broker’s voicemail – they won’t accept it for several reasons including the fact that we cannot verify that it is indeed you that is leaving the message.

When cancelling your policy always ensure that coverage is in place first to replace the insurance policy that you are replacing (if you are replacing it).  You definitely don’t want to be caught without coverage!

So remember, like anything else in life – put it in writing and send it via fax, mail, or email and make sure to get a delivery receipt.  Make sure you address the notice to your broker and things should proceed smoothly.250x250

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  1. Mark


    My girlfriend is going through an acrimonious divorce. Her estranged husband had refused to any type of separation agreement. They own a house and a condo together. He is living in the condo and she is living in the house This has been the situation for more than a year now.

    The condo and house insurance were lumped together into one policy which also included other extraneous things such as a camper. He has not paid a penny toward the insurance since he left. My girlfriend tried to cancel the insurance and was told that she couldn’t without his signature and that she would have to wait til the policy expired in October. She just received a rollover letter and copy of the new policy. When she called to say she did not want to roll the policy over she was told that her estranged husband would have to sign something to stop the roll over. Can they do this? She is not canceling a policy, It expired! She is choosing to not renew it and is being told she has no choice unless her estranged husband agrees.

    She has already obtained another policy to cover the house (from another company) but she refuses to be locked into a situation where she is forced to continue to pay for the condo too.

    Can the insurance company force a rollover when the two parties disagree?

  2. Claudio

    That is a tough situation. the insurance company has to keep coverage in place until it is replaced in writing elsewhere and/or canceled for non-payment. If he is listed on the policy, he absolutely has to sign. if they have a separation agreement in place showing division of assets, that would work in her favour. She can also just have herself removed from the policy and have them email the condo policy to him (that’s what i would fight to do)

  3. Anonymous

    Thank you for every other fantastic article. Where else could anybody get that kind of info in such an ideal
    method of writing? I have a presentation next week, and I’m
    on the look for such information.

  4. Gerald

    I recently switched insurance companies and when I cancelled my old insurance. Even though I had proof that I had insurance in place during the same time frame (paying insurance twice) they would not back date it and refund the overlapping months. In other words I was double insured on both home and auto. Is this legal? Is this true they can’t refund me the difference?

  5. Claudio

    That unfortunately happens sometimes which is why it is so important to get cancellation notice in asap. I’m in the middle of a similar situation right now where i have to argue with the carrier to backdate all charges.

    I’d keep fighting or have your broker/agent fight. I hope that the outcome is positive for you.

  6. isaac

    Hello I live in Ontario. And was wondering. What. The cancellation date meant am I still insured till the date given?

  7. Claudio

    yes you are covered until midnight of that date.

  8. Hyunjinlee

    Hello there i have insurance with intact. Last year one of my cooler broke so i did make claim but withdrawal the claim because i thought it wouldnt worth it to use insurance. However my deductible increased from 500 to 1000 which i dont understand. So before they renew policy i told broker to find other insurance for me but they told me to wait one month. So i did but now the are saying that they will pay 500 deductible when something happen and asked me to keep the policy till next year. I dont understand this situation. What should i do? Is there penaty to cancel the insurance?

  9. Claudio

    That’s weird – i don’t understand it either to be honest. If your broker cannot give you an explanation that makes sense, then it is time to find another broker who can.

  10. Joe

    I am with All State for my auto insurance from Nov 2015 and recently they increased premium more than double saying there was a claim and they are quoting very high for cancelling the policy. I spoke with another insurance company and despite of the claim they gave me very good price and to avoid the penalties, I was suggested to inform all state that I am not able to afford the new premium and selling my new vehicle and to provide me quote for parking (fire and theft insurance only) for old car ( I had two cars insured with All State). Can I drive my vehicles with the auto insurance from the new company, ? I am asked by All State to give in writing that I will be selling the new car and the other car will not be used. What are the risk factors. Your advice will be greatly appreciated. Thank you.

  11. Claudio

    Hi Joe, you can drive your cars on the new policy once you have confirmation of coverage – policy number, liability cards etc. I cannot speak to their cancellation policies nor can i speak to mid-term rate hike – that doesn’t make sense either. If they are being difficult, certainly remove the car that you intend to drive from the policy and keep the parked car on there with comprehensive coverage only. As long as you don’t have a gap in coverage for the insurance, you should be fine – make sure the new company sees to that. Also, make sure they review your current policy documents because they may be able to find a clause in it that can help you. Also make certain that the new company has completely approved the quote – often, the front line people will quote one thing to get the business but once the policy gets reviewed by underwriting, the rate would adjust to the risk. This has often left people very frustrated.

  12. Erin

    Hi there! I live in Saskatchewan and own a small business on my home property. Last year I got insurance because I thought I would be open to the public more, but I will only be doing private showings (it’s an art gallery). I emailed my insurer telling them I wished to cancel my insurance. He emailed back saying they would cancel it upon renewal which isn’t for another few months. Am I expected to pay and then wait for them to cancel it?

  13. Claudio

    often not true – life policies can be canceled by simply not paying anymore or the better way is to request cancellation once you have established a new policy elsewhere.

  14. Claudio

    Hi Erin,

    he likely told you that because you have paid for the policy already and canceling it so close to expiry wouldn’t benefit you at all. Even though you do private showings, doesn’t mean that the liability exposure doesn’t exist – in fact, it is not only present but it would be excluded on your house insurance policy, as would the art on display unless properly scheduled.

    sounds like a nice business though – do you have a website for the art?

  15. Lanie

    Hi how to cancel my life insurance bec I could not afford anymore

  16. Claudio

    you can either stop payment or send a signed letter to the insurance company asking them to cease the policy.

  17. dave s

    I having problem on cancel the insurance policy… I buy a policy under my daughter name… after 6 months I and my wife divorced due to found the baby girl not belongs to me… after for awhile I stop pay for insurance and return back the policy to the agent and request to cancel and refund. After 2 months I summit now I get to know that impossible to refund and I ask my agent to return back the policy… now my question is what are the correct proceeder to get refund. Seek your advice. ..

  18. Claudio

    That is a tough scenario. while you can certainly cancel most policies, you wouldn’t get a refund for time on risk. you would get money back for pre-payed time on risk. I would simply ask the provider and I’m fairly certain they will have the correct answer for you.

  19. Urban

    I realized my auto insurance with rbc increased by almost $100 this month without notice. Can someone tell me if that is possible?

  20. Claudio

    There could be many reasons for this – did you make a change in the policy in the middle of the term like change of vehicle or anything? Sometimes changes result in a jump in short term premium because there are fewer months in which to spread the payment. I’d check to see what is different (besides the cost). There is usually a logical flow to things – like physics – action/reaction. If there is nothing there, then perhaps it’s time to shop.

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