Thinking about driving without insurance? This would be an unwise decision, as it's illegal and you run the risk of paying steep fines and penalties. But, there are times when lines blur. Can you cancel your insurance if you sell your car? Or can you keep a car without insurance? Can you cancel insurance to save money now, and renew later, without penalty? Yes to all, but you have to do it the right way to avoid penalties and repercussions. Let’s dig into your options.
Don’t let your car insurance lapse
A lapse in your insurance history means you went without insurance for a period time, the reason though is an important distinction that auto insurance companies will factor when calculating your rate.
There are both good and bad reasons for a lapse in your car insurance history, these include:
Good reasons for a lapse
- Cancelling your policy when you sell your car and don't plan to replace it;
- Ending your coverage when your car breaks down or is totalled in a accident and you don't have means or need to replace it;
- Cancelling a policy for a vehicle you've chosen to take off the road for an indefinite time.
Bad reasons for a lapse
- Having your policy cancelled by your insurer for non-payment, fraud, mis-representation or as a result of too many tickets and/or claims (i.e. you've become too much of a risk for the company).
Why insurers don't like to see lapses in coverage
Insurance companies don’t like to see gaps in auto insurance coverage, especially when it's due to non-voluntary cancellation. For one, you're labelled as a high-risk driver, which could double your premiums. Not too mention, insurance companies factor in active driving experience into your rating calculation and some insurance companies only factor in your most recent continuous driving experience. Even if you had 10 years previous to your cancellation of coverage (even if it was voluntary), they may not consider it, which means you would pay more insurance than if you had never had a lapse in coverage on your record.
Alternatives to letting your auto insurance coverage lapse
Instead of letting of letting, you can put your car insurance on hold. You can speak with your provider on how to get cheap car insurance or shop for auto insurance quotes to find a better rate. But if you still want to cancel your insurance, there are rules to follow to prevent higher rates upon your return.
Getting the cheapest auto insurance for a lapse in coverage
Don’t let it lapse, instead carry insurance until you buy a new car or fix your old car. Many good reasons exist, however, such as selling your car, using healthier modes of transportation, or not being able to afford the costs of owning a caranymore. But, it won’t exempt you from higher rates in the future.
You can avoid the high-risk driver designation, but when you return, your loyalty discount goes away. Also, in general, car insurance quotes rise every year from cost increases to the insurer following the volume and frequency of claims. So, your new rate will be higher.
It doesn’t mean you can’t leave, or shouldn’t. You can save yourself some headaches with a few simple steps.
- Before leaving your provider, get a proof of insurance coverage letter or driving experience letter. It’ll help explain the gap to your new provider.
- You can ask for reinstatement from your old provider, not just a new quote, though there may be late fees or possible policy surcharges. Beware, they may ask you to pay in one lump sum. In other words, you’re paying 6 or 12 months all at once instead of one month at a time, so prepare to pay in full.
- If you have tenants or home insurance with the provider, keep it active. Tenant insurance is inexpensive, and if you have a mortgage, your lender requires you to have house insurance.
- Finally, treat it as a one-time event. While your insurance broker or agent may brush it off, repeated occurrences of reinstatements are unfavourable with your insurer.
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Why you shouldn't drive without car insurance in Canada
As we previously mentioned it's illegal to operate a vehicle anywhere in Canada without insurance. It doesn't matter if the car is yours, a rental or you borrowed it from a friend - the vehicle must be insured in order to be operated legally.
If you're caught driving a vehicle without insurance, you will face the following consequences:
- Paying significant fines for getting caught driving without insurance;
- If you’re at fault in a car accident you're on the hook for any financial implications;
- A driver’s license suspension or cancellation;
- Impounding of the vehicle;
- Even potential jail time, especially if it's not your first time being caught.
The fine you pay for driving without insurance is regulated provincially, so it's not an offence under the Criminal Code of Canada, it is a serious provincial offence. Each province has it's own set of fine limits and subsequent consequences.
Fines for driving without insurance by Province
Driving without insurance in Ontario
Fines start at $5,000, but it doesn’t stop there. Ontario car insurance regulator, FSRAO, will also add a 25% surcharge to your fine. Your license is suspended for a minimum of 30 days, but you could face a driver’s license suspension for a year. Finally, your car may be impounded for 3 months. It’s not a criminal offence, and you don’t receive demerit points.
Driving without insurance in Alberta
The penalty for driving without auto insurance in Alberta starts with fines at $2,875, but failure to pay can land you in jail for up to 6 months. It’s not a criminal offence, but you do risk losing your license if it ends up in court.
Driving without insurance in Quebec
In Quebec the Automobile Insurance Act stipulates that each vehicle owner must have civil liability insurance of at least $50,000, which covers damage to property or personal injury that you may cause in an accident involving the insured vehicle. If you are caught driving without insurance or proof of insurance, you face a fine of $2,800 plus an automatic licence suspension. You could even be barred from obtaining a licence in the future depending on the situation. Plus if you are involved in an incident, you will be mandated to pay for the damages out of pocket. Just like the other provinces, when you try and apply for Quebec car insurance in the future, you will be met with steep price increases or may even be barred from applying for insurance - meaning you can't drive a car in Quebec.
Is driving without insurance a criminal offence in Canada?
No, it’s not a criminal offence, but as you can see, fines and penalties vary by province. In the Atlantic region, for instance, provinces can suspend and impound your vehicle, face jail time, and have your license suspended. Failure to show proof of insurance, even if you have it, may incur other fines and penalties, though, a lesser charge.
Can you keep a car without insurance?
Yes, but be aware of your risks. While you probably won’t require collision insurance, it’s smart to keep comprehensive insurance on your vehicle to protect it from vandalism, falling trees, and other risks associated with a parked car.
Driving without a license
In Ontario, you’ll face fines of $200 to $1,000. Driving without a license in Alberta is a $2,000 fine, and you could also face jail time of 14 days to 6 months. In BC, it’s a $500 charge and up to 6 months in jail for a first offence. So, while driving without insurance is a significant risk, so is driving without a license.
So, don’t drive without a license, either.
The bottom line
Driving without insurance is not a risk worth taking. We already laid out the fines and penalties. If you get into an accident without insurance, you’ll be held responsible for paying for the repairs to your car, the cost of any medical bills. If you’re found at fault, you’ll also be liable for any resulting charges. The charges could be the person’s vehicle, their medical expenses, but also replacing their income if they’re unable to return to work. Finally, trying to get insurance afterwards, and, well, let’s just say, you won’t be getting any cheap car insurance quotes.