Cancelled Mid-Term? Not Always Permitted

A consumer contacted our office after their automobile claim was denied and their insurance policy was subsequently cancelled mid-term. The consumer was concerned that the cancellation was related to the insurer's suspicion that inaccurate information may have been provided during a claim process.

After reviewing the circumstances and discussing the matter with the insurer, it was determined that while the claim had been denied, the insurer did not have grounds under the applicable rules to cancel the policy mid-term on that basis. 

The insurer agreed to reinstate the policy and allow coverage to continue until the end of the policy term.

This situation highlights an important point for consumers: a claim denial does not automatically give an insurer the right to cancel a policy mid-term. If you are uncertain whether a cancellation was handled properly, asking questions and seeking clarification can help ensure the correct process was followed.

Consumer takeaway: If your policy is cancelled and you don't understand why, ask for a clear explanation of the reason and the authority under which the cancellation was made. Under New Brunswick law, an insurer has only limited grounds to cancel an insurance policy once it has been in force for more than 60 days. After this period, an insurer generally cannot terminate coverage except for specific reasons permitted by legislation.