Insurance 101: Ways you may be unintentionally putting your car insurance coverage at risk

Your auto insurance policy exists to protect you as an owner of a vehicle or as a driver, from risks associated with the responsibility of driving a car. But no car insurance policy protects against everything. In fact, all policies come with a set of exclusions or limits.

There are ways you can inadvertently break the terms of your insurance contract which can result in your policy being invalidated. 

Here are some commons ways that you can invalidate your car insurance coverage:


Non-payment is one of the most common ways that a driver can invalidate their car insurance policy in Canada. Non-payment means that the policyholder has not made their insurance payment. Skipping any number of insurance payments – even one – can give your insurance company the right to cancel your policy. Typically, when a customer has failed to make their insurance payment, the insurance company will notify them, giving them a certain number of days to make the payment. If the customer still does not pay in this time frame, then the insurance company can cancel your policy. If you are at risk of not being able to pay your insurance policy, make sure to contact your provider. Insurance companies are more understanding than you might think, and if you express that you are struggling to pay your bills on time, they might offer a new payment plan. Lastly, if you have several auto insurance policies, make sure you set payment reminders for each one. Otherwise, you run the risk of accidentally forgetting to make a payment and having your policy cancelled.


Another way that a policy holder might invalidate their car insurance policy is if they misrepresent themselves or their situation. Misrepresentation is when a customer lies or intentionally withholds important information when purchasing auto insurance. Some customers might be tempted to misrepresent their situation for example, claiming they live at a different address than their real address to benefit from a lower premium. This is always a mistake. When your insurer finds out you lied, they can void your insurance coverage. A few untruths that policyholders may be tempted to tell their insurance company include claiming that they are the sole driver of their vehicle when several other members of their household drive their car regularly, or failing to tell their provider that they use their vehicle for both business and personal use instead of just personal use. At the end of the day, it is crucial that you tell the whole truth when applying for car insurance.

Change in situation or material change in risk

A change in situation or material change in risk may also lead to an invalidated car insurance policy. A change in situation is if something happens to you that significantly changes your risk level as a driver. For example, if you were working from home then start to go back to the office, this constitutes a change in your commute distance and your insurance company should be advised.

Driving with a suspended driver’s licence

If your driver’s licence has been suspended, for example if you were convicted of impaired driving, that may invalidate your policy. Any contravention of the highway traffic act that results in a conviction can pose a potential threat to your insurance coverage.

Failing to notify your insurer about vehicle modifications

Certain vehicle modifications can affect your insurance rates. Some might even be forbidden according to the terms of your insurance contract. Thus, if you plan to modify your vehicle, you must review the terms of your contract and notify your car insurance provider in advance. Failing to do so and moving forward with modifications can cause your insurance company to invalidate your policy.

Committing an illegal act

Similar to the principle behind driving under the influence, if you are caught and convicted of committing an illegal act while driving, your insurance company is likely to deny your claim and invalidate your policy. Examples of illegal acts on the road include engaging in racing, driving a car without insurance, or allowing someone else to operate your vehicle who engages in any sort of illegal act.

Using your car for ride sharing without informing your insurance company

Personal car insurance plans are just that, personal. This means under the terms of your insurance contract you are likely only permitted to operate a vehicle for personal use. Participating in ride sharing, or peer to peer vehicle sharing, qualify as business use. Thus, if a loss occurs while using your vehicle for ride sharing, and you never told your insurer that you use it for this purpose, your car insurance provider can deny your claim. They can even cancel your policy, as this would be an example of misrepresentation.

Failing to update your personal information

It may not sound like a big deal, but something as small as forgetting to tell your insurance provider about a change in your home address can be enough to void your coverage. It may also lead to your payment notices heading to the wrong address which can lead to missed payments. As with failing to tell your insurance provider about ride sharing, forgetting to inform them about changes to your personal circumstances, like a change in address, may qualify as misrepresentation, leading to your policy being invalidated.

Regularly lending your vehicle to another driver

If you let a friend or family member borrow your car on a regular basis but you do not notify your insurance company, that could invalidate your policy. Car Insurance premiums are based on several factors, one of which is the respective driving histories of any person who regularly drives your vehicle. If you do not tell your insurance company that someone else has begun driving your car regularly, that could invalidate your policy. This is especially likely to be the case if the person you did not inform them about is a high-risk driver.

Tips to avoid invalidating your car insurance coverage

If you want to avoid invalidating your car insurance plan, follow the tips below

Honesty is the best policy

Our first tip for avoiding having your car insurance plan invalidated is to tell the truth. Honesty is always the best policy when it comes to car insurance. If you do not want your policy to be cancelled, always be upfront about your circumstances and situation. This goes whether you are applying for your first-ever car insurance policy or submitting a claim to your insurer. A few circumstances that you must always be honest about, and notify your insurer about if any of them change, are as follows:

  • Your home address
  • Your driving history (including any accidents or incidents)
  • The make, model, and year of the vehicle you drive, along with any vehicle modifications
  • How you use your vehicle and if you commute to work
  • Whether you use your car for business reasons, personal reasons, or both
  • Your annual mileage
  • Other drivers who reside at the same address


Informing your car insurance provider about changes

If your circumstances have changed, such as you moved to a new home or bought a new car, you must let your insurance company know as soon as possible.

Make insurance payments on time

One final tip for avoiding having your car insurance plan invalidated is to make your payments on time. Making your insurance payments by the deadline, whether you opt for a monthly or annual plan, is crucial. Failure to make your payments on time is one of the most common reasons that car insurance plans get cancelled in Canada. To ensure you don’t miss your next payments, set a reminder on your computer or smartphone to make payment a few days before the due date. Alternatively, if you know you’re forgetful and it’s feasible to do so, choose to pay for your insurance plan yearly so you only have one payment deadline to keep track of. As mentioned previously, if you are at risk of non-payment, get ahead of it by calling your insurance provider and informing them of your issue. They might be willing to work out a new payment schedule with you.

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