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.

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  1. kevin

    I have just purchased my first home. Recieved a quote for home insurance and agreed to the policy.
    When the policy came in the mail on or about closing day January 15 2014, the amount was $28 more per month than quoted, and my girlfriends name was not listed on the policy. I am not impressed and think I may cancel and move on. Is there a time in the first 14 days where you can cancel without penalty?
    Or are those two errors a valid reason for cancelling without penalty?


  2. Claudio

    you can cancel for any reason you choose – if you don’t like the person’s demeanor or even their mustache : ) .

    I would check to see if there are cancellation fees (which there will be) and i would first obtain a new quote. To be perfectly honest, i would stay on for at least a year. You are a new home owner and need the insurance experience in order to get cheaper rates.

  3. Anonymous

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  4. anonymus

    Our original homeowner policy expired – my husband shopped around and found one that was cheaper than the previous, so we took it. We are now being harassed by the previous agent who is demanding we send payment of $500+ in order to cancel a policy we did not agree to…… does this seem right?

  5. Claudio

    It would depend on the terms of your insurance contract. Did it renew automatically and for how long? if he can justify it, while it may not be right, it could be legal.

  6. Chris

    Hi, I cancelled my life, critical illness and disability insurance policies a year ago. Is it possible to get the money I paid to the companies back?? I didn’t ask about this when cancelled but they got about $4000 of my cash!

  7. Claudio

    it totally depends on the terms in the policy and how long it was in force. I cannot answer that question here.

  8. Dan M

    Canadian, Nova Scotian Resident. I had two home and auto(1) insurance policies through a single, well known, broker. One property and car insurance policy were combined under one insurance company and my other property under a separate insurance company. The home under a separate insurance company was insured and paid regularly with no hiccups for over 5 years, the auto even longer, and the second property only a year but auto was combined with it when it was setup. Approx. 7 months after setting up a new home insurance policy for my newly purchased, second property, my insurance company contacted me to inform that there could potentially be savings by putting both properties and auto under one insurance provider and that they would look into it and get back to me.

    I had paid my insurance in advance for both properties and auto, approx. 3 months before the anniversary date, my payments for all three stopped for 3 months, then a large lump sum was taken from my account. I contacted the broker to ask what the changes were and why a large lump sum was withdrawn to which I was told both my properties and auto were now under one insurer and 3 months worth of payments were extracted. The 3 months they charged for were for months I had already paid in full for and the broker informed me I would receive credit back for the overlapping payments as they had gone ahead and setup all my policies under one provider (without asking permission or notifying me aside from saying they “would look into it”). I never received compensation for those 3 months already paid for and 4 months after the lump sum coming out of my account (and the new monthly amount reflecting a consoldiated payment for the three policies) the insurance company again contacts me to say I owe the full amount for one of my properties. The reason they stated was because my insurance for that property was cancelled (with no claims or missed payments on either property or auto) and even though the policy is cancelled the broker still pays the insurance provider to maintain coverage.

    Now, I try to stay fairly educated with processes and procedures but this has totally confused me. I paid twice for insurance coverage for 3 months, received no compensation and 4 months after apparent changes I’m told something completely different about the changes that were made to my policies and asked to pay the full annual amount for a home insurance policy. I have told the broker I did not request that one of my home policies be cancelled, was informed everything was consolidated, had a consistent payment record with no claims filed for any of my policies, and to indicate that I owe the full amount for home insurance after being a client for 5 years was absurd and if it was cancelled I would find insurance coverage elsewhere. This resulted in the broker informing me I would be responsible for paying for a years worth of cancelled home insurance and if I refused to pay it they would involve a collection agency.

    This seems like a highway robbery bully tactic that I’m not giving into and questioning what can be done without paying out more money to involve a lawyer. Any suggestions to this situation would be greatly appreciated (As I have not been able to find a similar situation to this through any forums on google anywhere). Thanks in advance.

  9. Brix

    Our broker was informed that I would cancel my policy due to I cannot continue paying. She said I have to make a written request to cancel the policy stating the real reason, so I did. and return all the documents she gave. Within 1 month, she informed me that our insurance policy cannot be cancelled and I should pay the monthly dues. What can I do about this?

  10. Jessica

    The policy with my current company expires July 19 (tomorrow). I’ve already obtained replacement insurance with another company as of this date. I didn’t send the cancellation letter until Wednesday, and it was delivered today. Should that be all I need to do to cancel? Their website said to use my online account to request a change to my policy. Should I do that as well or is the signed letter sufficient?


  11. Claudio

    Normally i would say that you have done enough but you still have time to do the online thing. I’d so it as well.

  12. Claudio

    sorry for the delayed response, I haven’t had the opportunity to go into this. I would check the policy wording itself to see if there is something called “minimum retained premium” or retained premium.

    That will tell you what is refundable.

  13. Claudio

    sorry for the late reply. That seems odd on many levels. Not sure about the system there but under privacy laws, doesn’t your broker have to consult you and get approval for making changes to your policy like that?

    Hopefully you have all the documentation?

  14. Anne

    I just lost my home insurance due to non payment (I’m unemployed and my boyfriend is on disabilty) and I’m starting to panic because the insurance company – Intact – said that so one will insure me and my broker said that they might be able to find a company but it will cost me $$. I was paying 175 and fearing the worse. Also, I was told that I can lose my mortgage as well…help!!

  15. leroy

    i found a new cheaper auto insurance and now want to cancel my current one which I have been on for 7 months, do you think I will be charged for cancelling my policy.

  16. Claudio

    i don’t know what your policy says but you should be okay Remember that you lose any home and auto discounts if you move mid policy.

  17. Joyce

    I have had my auto insurance with intact and my car has developed mechanical problems with a huge repair bill.

    I have decided to get rid of the car and purchase a new one.
    I have gotten a really good quote from belair direct for the new car so i need to cancell my policy with intact mid-term.

    Just spoke with my broker to find out what the cancellation charges are and she goes.. I think its about one month worth of premium…(I pay $366/month!!!)

    So I call intact to find out what the cancellation fee is and i get told that they don’t deal with the public! they only deal with brokers.

    Now I’m stuck on this.
    How much is too much when it comes to cancellation fees mid-term? and what are my options.
    switching will save me $500 dollars plus give me much more coverage.

    I just need your advice on this.
    btw: broker is Mitchell & Whale Insurance Brokers.

  18. Claudio

    well firstly i’m not sure if you know but Belair is Intact insurance.

    Cancellation depends on how far into the policy you are. Premium, although spread monthly for our convenience, is earned by the insurance company much faster than that.

    Without knowing more details, i would have to defer to the broker who is simply calculating the estimated amount owing from the information they have.

    Auto insurance is very regulated and straightforward.

    when you spoke to Belair, did you quote get approved or was it simply done online? as i said, Belair is Intact insurance.

  19. Claudio

    While i commented privately on this, i wanted to make a comment on the site. When you have an insurance policy, it is so important to keep track of the payments. The companies do have to give you notice if you missed a payment and allow the opportunity for you to make it up (usually they will withdrawal it at the next scheduled withdrawal date).

    When canceled for non-payment, several things happen:

    a) its noted in your file – the insurance industry is small, it always comes out (in ontario, your auto policy insurance record shows cancel for non-pay)
    b) collections – if you owe money, they insurer or broker will do what it can to recoup the funds
    c) getting a new policy, you will have to declare why the last policy was canceled. You may be required to pay the full premium up front for a couple of years.

    if you are struggling to pay the bill, cancel the coverage and sort out your finances (unless its auto insurance which requires mandatory coverage)

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