Kanetix Forum

When purchasing car insurance, is there a penalty if I must cancel my insurance half way through the contract or anywhere within the contract?

Thanks!

The answer to this question depends on the insurance company you are insured with.

The vast majority of insurance companies charge a cancellation fee called a "short-rate." This short rate will vary depending on what point during the term you cancel your policy. A rule of thumb I tell my clients is to expect a charge equivalent to roughly several weeks worth of premium for breaking the contract early.

However, there are some insurance companies that do not impose a penalty for cancelling mid-term. They will offer a "pro-rata" cancellation which means you only have to pay for the time period you were insured, nothing more, nothing less.

Sean Graham, Principal Broker at KTX Insurance Brokers.

Neither Kanetix® nor the KanetixForum.ca is an insurance broker or agent. Although this information has been passed along to you from KTX Insurance Brokers through the Forum, we are not responsible for the opinions expressed by them. Insurance can be complicated. When reading these answers, keep in mind each person¿s situation is unique. Individual responses may vary depending on your insurer, geographic location, and specific circumstances. If you have a similar situation, always speak with your insurance provider, or a licensed insurance representative, for terms and conditions that may apply to you.

While you didn't specify why you are interested in cancelling your current policy, this article found on Kanetix.ca might be helpful to you when deciding whether cancelling your insurance is a good idea or not.

• Switch Now, Save Now?: What happens if you find a better car insurance deal before your current policy expires?