Can I Cancel My Home Insurance?
Home insurance coverage is vital to protect you and your loved ones from incidents like house fires, floods, burglaries, or liability cases. It’s an essential part of homeownership and can spare you from paying millions of dollars out of pocket. However, there may be a time when you want to cancel your home insurance policy. Let’s explore what you should know about this process.
When You Might Want to Cancel Your Home Insurance
Here are some reasons you might want to cancel your home insurance:
- Your current rates are increasing
- You found a better rate elsewhere
- You paid off your mortgage
- You sell your home or move
While these may motivate you to cancel, doing so can do more harm than good in many cases. For example, if you paid off your mortgage, home insurance is not legally required in Canada. However, having no policy coverage can lead to hefty financial expenses if an accident happens.
Fees for Cancelling
Cancelling your home insurance during your contract comes with costs and penalties. If you currently have a mortgage, you could face additional consequences as your lender could demand full repayment or exercise their power of foreclosure.
If you cancel before the end of your contract term, fees may include the following:
- Early cancellation penalty
- Administrative fee
- Short rate fee (takes into account your premium and how much time you have left on your policy)
The earlier in the contract, the more it’ll cost you. You won’t pay fees or penalties if you wait for your contract to expire and decide not to renew.
How to Cancel Home Insurance
Always read your policy’s contract before cancelling. Call your insurance broker or insurance company to help you better understand the terms of your plan. They will also explain all the costs associated.
Most insurance providers require a signed written letter documenting your intent. Keep in mind that the policy will cancel upon receiving the letter, not when you send it.
Changing to a New Provider
If you want to switch to a new insurance provider, the best practice is to begin shopping for alternatives before you cancel because there can be delays with this changeover. Ensure your new policy is set to start on the right day so you’re always covered. This is especially important if you still have a mortgage.
When You Shouldn’t Cancel
Unless you paid off your mortgage, are selling your home, or are wealthy enough to shoulder the cost of a multi-million dollar claim, cancelling your home insurance may not be the best option. Alternatively, you can adjust your existing policy to lower your monthly premiums.
Aside from the consequences of fees and penalties, don’t cancel your home insurance if:
- You have a mortgage and no new policy.
- You are concerned about how your insurance history and cancelling can impact future premiums.
Talk to Your Insurance Broker
If you’re considering cancelling your home insurance policy, contact us at Rowat Insurance. No matter your circumstance, we’ll ensure you fully understand the implications and process before deciding. If you’re unhappy with your current policy, we’re also here to find the one that best suits you!