Can I cancel motorcycle insurance in winter?

After the summer, motorcycle owners across Canada start wondering, “Why keep paying for motorcycle insurance in the winter when my bike is hibernating in the garage?” 

It’s tempting, right? Cancelling your motorcycle insurance for a few months seems like an easy way to save some cash. However, there are a few things you should know before making any moves. Let’s take a look at why cancelling your motorcycle insurance during the winter might not be the best idea.

Can I cancel my motorcycle insurance in the winter?

Like car insurance, you can cancel your motorcycle insurance during the off-season. But just because you can, doesn’t mean you should.

Insurance companies price motorcycle policies with the seasons in mind, meaning they know you’re not likely to ride your bike in the middle of January. So, they’ve already factored that into your annual premium. 

Plus, cancelling your coverage could bring on cancellation fees and impact on your future insurance rates. Most insurers don’t like gaps in coverage, even if they’re for just a few months. When you go to renew your insurance policy in the spring, you might find yourself facing higher premiums because of that winter gap.

How do motorcycle insurance policies work?

Motorcycle insurance policies are typically set up as annual contracts. This means you’re not paying for individual months of coverage, but rather a year-long policy that takes into account the whole riding season. Since insurers understand that most riders won’t be using their bikes year-round, they calculate premiums to reflect this seasonal use.

The bulk of your payments are concentrated in the months when you're actively using your bike. Instead of equal monthly payments, you'll pay more during the riding season and less in the winter.

Let’s see what that could look like for a policy on a motorcyclist in Ontario with annual premiums of $2,400. In the table below you can see how insurance companies accrue an earned premium at a different rate than what a rider is actually paying in monthly premiums. This calculation is important to understand if you ever wanted to cancel your policy mid year.

How do earned premiums work?

Now that you understand how seasonal adjustments affect your policy, it’s also important to know how insurers calculate what you owe throughout the year. This is where the concept of earned premiums comes into play.

An earned premium is the portion of an annual insurance premium that an insurer has "earned" by providing coverage. For instance, if you pay for a one-year policy, the insurer earns a portion of the total premium each month as they continue to provide you with coverage. 

This earned portion is non-refundable because it’s already been used to cover you while you rode all summer and fall. If the policy is cancelled after that, the insurer may only refund the unearned portion—the amount for the remaining months that haven’t been covered yet.

For most motorcycle insurance policies, more of the premium is “earned” by the insurer during peak riding season. This means if you cancel your policy in the off-season, the insurer has already earned a significant portion of the premium, so any refund you might get would be minimal. This is unique to motorcycle insurance as other policy types like auto and home insurance accrue earned premiums at the same rate as paid premiums, so the cancellation calculation is different.

Why shouldn’t motorcycle insurance be cancelled for the winter?

Cancelling your motorcycle insurance in the winter can lead to some serious headaches. Here’s why it’s better to keep your coverage year-round:

1. Theft doesn’t take a holiday: Just because your bike isn’t on the road doesn’t mean it can’t be stolen. Even if you have comprehensive insurance during the riding months, cancelling it leaves you unprotected if someone swipes your ride while it’s parked in your garage or storage unit.
2. Gaps in coverage can lead to higher rates: As mentioned earlier, P&C insurance companies don’t like seeing gaps in coverage. When you cancel your policy for a few months, you’re creating a hole in your insurance history. This gap can raise red flags for insurers, and when you go to get a new policy, they may charge you more.
3. Cancellation fees: Some insurers will hit you with a fee for cancelling your policy early. These fees could range anywhere from a small charge to a significant portion of your remaining premium. 
4. Liability risks: Even if your bike is tucked away for the winter, things can still go wrong. What if someone trips over it in your garage, or it gets damaged in a fire or flood? Without insurance, you could be on the hook for repairs or legal fees.

Canceling motorcycle insurance – the bottom line

So, can you cancel your motorcycle insurance in the winter? Sure, but it’s probably not worth it. 

Cancelling your coverage might seem like a quick way to save money, but it can actually cost you more in the long run. Between gaps in coverage, earned premiums owed, potential premium hikes when you restart, and the possibility of cancellation fees, the risks of cancelling your motorcycle insurance in winter far outweigh the rewards. 

Instead of cancelling, consider other ways to save, like adjusting your coverage or asking your provider about winter storage discounts. But whatever you do, don’t leave your bike uninsured—it’s just not worth the risk.

Also read:

• How to get cheap motorcycle insurance in Ontario
• How to get a motorcycle licence in Ontario
• How to cancel your car insurance policy