How to cancel your home insurance in Canada

If looking for a better rate, aren’t happy with your provider or are moving to a new home, you may be considering canceling your home insurance policy. This article will examine the best time to cancel, the standard steps to end a policy and various considerations to keep in mind when canceling your home insurance coverage.

Why might you want to cancel your home insurance policy?

Canceling your home insurance policy isn’t a decision you want to take lightly. Even if you’re unhappy with your current provider, it’s vital to always have a home insurance policy in place. Depending on the policy you have, home insurance will cover you for damage from fire and theft, as well as any potential lawsuits stemming from a personal injury that takes place on your property (like someone slipping on a sidewalk in front of your house).

That said, even though you need home insurance, you don’t have to stick with coverage that isn’t working for you or avoid looking for a better or more affordable policy.

Here are just a few examples of why you might want to cancel your coverage and get a new policy:

• You're moving or selling your home and renting: A move to a different home that has unique features (like an old electrical system) or a much larger lot, for example, may necessitate a new kind of policy. Note that if you’re selling a house to move into a rental, then you’ll want to consider tenant insurance rather than a homeowner’s policy.
   
  Tip!
  If you're moving within the same province or territory, consider sticking with your current insurance provider and just updating your policy until the end of your term so you're insured during your move and won't have to pay any additional fees.

• Your rates have gone up/You found a better rate: Looking for a better rate is a financially savvy reason to cancel an old home insurance policy.
• You're unhappy with your current insurance provider: If you feel your provider does not offer good customer service or has mishandled a claim, it may be time for a new policy.
• Your mortgage is paid off and you no longer need home insurance: Some people feel they may no longer need home insurance once they’ve paid off their mortgage but this could be a very costly mistake. Consult your broker to adjust your policy by removing unnecessary endorsements or by increasing your deductibles to save money.

Related: How much home insurance do you need?

Can you cancel your home insurance at any time?

In general, most homeowners can cancel their policies at any time. Keep in mind, however, that you may be required to pay a cancellation fee if you terminate your policy before the end of your term (read the terms and conditions of your current policy or contact your insurance broker to see if you’d be charged a fee).

Note that if you paid in full at the beginning of your term you may be owed the balance of your premiums upon cancellation. Furthermore, you won’t be charged a cancellation fee if you terminate your contract at the end of your current policy term, just before your renewal is processed.

Be aware that your insurance obligations may be different if you hold a mortgage or are part of a condo association. Most mortgage providers make it a condition of providing a loan that the borrower have home insurance.

If you cancel your home insurance policy without a new one in place, your lender may demand you pay off the entire amount owing on your mortgage. If you own a condo, your condo association may also make it mandatory to always have condo insurance and you could be sued if you don’t abide by the rules. For these reasons, it’s always wise to do your research and understand your rights and obligations before cancelling a policy.  

Related: Six reasons your home insurance could be cancelled

What are the best times to cancel or switch your insurance policy?

There are two ideal times to cancel your current policy and go with a new provider:

At renewal, to avoid fees

Your insurance policy will be up for renewal at the end of your annual term. This is the ideal time to cancel because you won’t be charged any fees as long as you end the contract before it’s renewed. (Be aware that you may be on an auto-renewal schedule so be sure to cancel before the allotted renewal date).

During the rescission rights period

In Canada you have a “right of rescission” when you buy a new insurance policy. During this period, you can’t be charged a penalty fee if you cancel. The rescission rights period varies by province but usually ranges for between 10 to 20 days after you receive your documentation.

How to cancel your home insurance policy?

Each provider may have different cancellation requirements, but these are some general steps:

1. Contact your provider to let them know that you’ll be cancelling. Make sure you have your policy number handy. Some may require that you tell them formally in writing of your intention to cancel.
2. Ask if you’ll have to pay a penalty (though you should not have to pay any fees if you’re canceling at the end of your term).
3. Make sure you go over your insurance documents and are clear on fees or refunds that you are owed.
4. Ensure that you get confirmation of your cancellation in writing or via email.
5. Make sure that you have a policy lined up to avoid gaps in coverage.
6. Inform your mortgage lender and make sure they approve the new policy.

While cancelling your home insurance is a big decision, you don’t have to stay with a provider you’re unhappy with or a policy that doesn’t fit your needs. Just be sure to have a new policy ready to go upon cancellation so you’re not without protection. 

Read next: Surprising things you can make a home insurance claim for