Ineligible car insurance applications

Declined car insurance in Ontario and Alberta

In Ontario, insurers are only permitted to decline car insurance applications in accordance with their specified underwriting rules. These rules must be filed with and approved by the Financial Services Regulatory Authority of Ontario (FSRAO).

If your car insurance application is declined, or your existing policy is non-renewed, your insurance provider must tell you in writing which rule it is using to deny your coverage.

In Alberta, car insurance declinations are not as strictly regulated. Nevertheless, they typically follow similar guidelines to Ontario-based insurers, and still must use a previously-filed rule to decline an application.

Underwriting guidelines differ between providers. However, here are some typical underwriting reasons for which a policy may be declined in Ontario or Alberta:

• The applicant has too many driving convictions or at-fault accidents on their record.
• The applicant previously had a car insurance policy cancelled for non-payment.
• The applicant previously failed to provide accurate or complete information on a different car insurance application.

In Ontario, for a company to decline an application for these (or any other) underwriting rules, that rule must be one that has been filed with the FSRAO and approved.

In either province, there are some factors that insurers can’t use as rules for declining or non-renewing a policy. These include:

• Whether the applicant has a disability.
• Where the applicant lives or where they keep the insured vehicle (unless this is outside of the province where they are trying to buy insurance — you generally must buy your insurance in the province where the vehicle is located and used).
• Whether the applicant is a new driver.
• Whether the applicant is new to Canada.

While these factors can’t result in a declined application, providers may still use some of them to calculate an applicant’s insurance premiums.

Declined car insurance in Quebec

In Quebec, all residents have basic coverage under the province’s public car insurance agency, the SAAQ. There’s no application required, so the basic coverage is available to all Quebecers.

However, the SAAQ only covers injuries.

To secure coverage for damage to your vehicle or your liability for damage to other vehicles, it’s necessary to purchase private car insurance. Private car insurers may decline an application for car insurance under certain circumstances.

Much like Alberta or Ontario, you may have trouble finding private car insurance if:

• You have several driving convictions in recent years
• You’ve made many car insurance claims in the past
• You’ve had car insurance policies cancelled for non-payment
• You have a prior record of misrepresentation or auto insurance fraud

While the public agency provides some coverage, drivers in Quebec must carry at least $50,000 in civil liability (or “one-way”) insurance. This coverage is only available through private insurance providers, so high-risk drivers may have trouble finding a company to offer them a policy.

What can you do when your car insurance application is declined?

If one provider declines your car insurance application, you may have better luck with a different provider.

However, for high-risk drivers with many infractions or at-fault accidents on their record, finding car insurance can be difficult. If you have been cancelled for underwriting reasons — like misrepresenting your insurance or conviction history when applying for a car insurance policy — then you may lose the ability to obtain car insurance from mainstream insurance providers for a number of years.

In Ontario or Alberta, such drivers can seek insurance through alternative high-risk insurers or through the Facility Association. The Facility Association is a pool shared by many car insurance providers, and exists specifically to provide coverage for high-risk drivers. The Association can help drivers in Alberta and Ontario (as well as several other provinces and all three territories). When a provider declines to offer a regular auto policy, they can refer the declined client to the Facility Association. This might sound complicated, but the good news is that you don’t actually have to approach the Facility Association yourself — car insurance brokers can obtain quotes for you, almost exactly like they would a regular auto policy.

However, The Association doesn’t operate in Quebec.

In Quebec, high-risk drivers that can’t find a private insurer to cover them can turn to The Insurance Information Centre. The Centre will help anyone find at least the minimum coverage required by law, following a procedure known as access to insurance. However, to be eligible for this assistance, you must have been denied car insurance by at least five insurers. When you’re applying for car insurance, make sure you keep records of the companies you’ve applied with and their responses.

Applications are approved or declined; claims are approved or denied.

Criminal records by themselves are not a barrier, as the vast majority of crimes are unrelated to auto insurance. EG: a prior conviction for robbing World of Bongs will not be considered by auto insurance underwriters.

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