Can you put your car insurance on hold?

Tyler Wade
by Tyler Wade March 20, 2020 / No Comments

Yes, you can pause car insurance, but there are stipulations. There are also some differences in public and private systems worth exploring. Let’s try to understand how to make a decision to hold your insurance.

First, COVID-19 is making many insurers adapt to the new reality. Some insurers are rolling out automatic discounts to all their members. Most insurers are waiving NSF fees, and allowing for payment deferrals so you don’t have to you put car insurance on hold. Instead, you can reduce your coverage to “parked car” or comprehensive only, but make sure you reinstate your coverage before taking it out to drive. It’s illegal to drive without coverage. If you’re caught, there are severe repercussions.

Can you put car insurance on hold in Ontario?

Technically, in Ontario’s private car insurance system, the answer is yes, but it requires 2 Ontario Policy Change Forms – OPCF16 & OPCF17.

OPCF 16 is for “Suspension of Coverage.” It cancels your car insurance until it is reinstated. For that, you need a “Reinstatement of Coverage” or OPCF 17.

By signing, you give up the 4 main components of car insurance

  • liability – if you hit someone else’s property
  • accident benefits – covers injuries sustained in a collision
  • uninsured auto – should someone hit you that has no insurance
  • DCPD – after a crash, you receive compensation from your insurer if you’re not at fault

Your insurer may choose to refund a portion of your insurance, and only if the suspension is at least 45 days. That refund is as a credit, which is available when you reinstate your car insurance. Speaking with brokers, however, they tell us that most of the time there are no fees charged to add OPCF17 and remove OPCF16. Still, it’s best to confirm with your insurer about any potential fees.

While liability and accident benefits are easy to give up, uninsured auto and DCPD are still valuable, especially if you park on the street and someone hits your car. But then, to some degree, so is liability and accident benefits if your car rolls down the driveway and hits someone.

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Can I suspend car insurance in BC?

ICBC, the public car insurance provider for all BC drivers, has a storage policy. The example they use is parking an RV for the winter in a driveway. The only time you really need insurance is for when something happens to it while it’s parked (unless you’re worried about it rolling down the driveway). For instance, should a tree fall on it, you’ll still be covered.

Storage is a smart option, and because it’s not hidden behind forms and stipulations, it’s much easier to do. But, even ICBC leaves it open for you to add collision and liability to your storage policy. So, it leaves question marks on what you might be missing without full coverage.

Things to be mindful of when putting your car insurance on hold

  • Seek clarity around charges and fees when reinstating your coverage.
  • Your premium may go up, most insurers won’t increase your rate, but it’s still good to clarify.
  • In the rare case your insurer views it as a cancellation, it’s possible to be labelled a high-risk driver making it harder to find cheap car insurance quotes in the near future.
  • If you need to drive it for any reason, say in an emergency or a short jaunt to the grocery store, then you’re driving without insurance, and that’s illegal. It carries with it significant consequences.
  • You’re responsible for informing the insurance company when you need your insurance reinstated, even if you told them upfront, you have to call them again. You must ensure the coverage is live before driving. Being forgetful, or explicit failure to do so, and once again, you’re driving illegally.
  • When traveling, you’ll need to buy overpriced rental car insurance package to cover liability and personal accidents. (No, your credit card doesn’t cover these)

Read our blog,“Cancelling car insurance”

Ways to save on car insurance during Coronavirus

Instead of putting your car insurance on hold, try reducing your coverage and opt for the minimum. It’s much easier to call your provider and remove endorsements (or car insurance add-ons) you don’t need – like collision or comprehensive. You can even reduce some of your coverage amounts, such as lowering third party liability to a low risk $200,000 minimum.

While you’re on the phone, take this opportunity to ask your broker or agent if there are other ways to get cheap car insurance. It never hurts to ask. Now that you’re driving less kilometres, you can temporarily change your car insurance to reflect the new reality and save money. During this time, if you have a second car, it might make sense to only leave comprehensive insurance on it and remove collision insurance.

Unfortunately, temporary car insurance is not an option for Canadians at the moment. But, it may not be far off, as it does exist in places like the UK with international insurers like Aviva. There is, however, pay as you go insurance from CAA called MyPace. But, if you’re going to be driving your car for more than 9,000km in a year, it’s not a recommended form of auto insurance.

Read our blog,“Switching insurance companies”

The bottom line

Speak with your insurer and confirm there will be no additional fees with putting your car insurance on hold. The biggest risk is actually forgetting to reinstate and the temptation to make an emergency trip, thus driving illegally. Instead, try going to the minimum coverage.

Car insurance coverage is mandatory in Canada. There are mandatory minimums for a reason – to protect against inherent risk. With what we’re learning about risk right now, it’s best to make an informed decision. Again, speak with a broker to discuss your options.

Check out our comprehensive guide – personal finances during COVID-19

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