What happens if you miss a car, home or life insurance payment?

With files from Kerri-Lynn McAllister

This article was originally published on June 1, 2016 and was updated on May 26, 2026.

Missing an insurance payment is more common than you might think. Premium costs are rising across Canada, making it difficult for many policyholders to keep up with all their bills. Inflation, severe weather, high repair and replacement costs, and ongoing auto theft are just some of the reasons rates are rising and pushing Canadians into financial difficulties.

If you find yourself unable to make an insurance payment, there are steps you can take to minimize the consequences. Although it depends on where you live and how quickly you notify your insurer. 

Keep reading to learn what happens if you miss a car, home or life insurance payment in Canada.

What counts as missing an insurance payment?

Insurance companies consider non-payments, late payments, and partial payments in the same way. The same goes if your payment bounces due to insufficient funds in your account. If any of the above happens, it will be considered a missed payment, and your insurance company will typically send you a notice. Once that happens, you usually have a grace period to pay your premium. 

What is a grace period in insurance?

A grace period in insurance is the window of time that follows missing a payment, during which your policy remains active. It acts as a safety net, giving you a chance to pay your premium without cancelling your coverage. Grace periods in Canada vary by insurance type, insurance company and province. 

For example, grace periods for auto insurance can be as short as 5 to 10 days, depending on your location, whereas for life insurance, grace periods are typically closer to 30 days. 

If you fail to pay your premium during the grace period, insurers will typically cancel the policy. Most insurance companies will issue a notice of cancellation before doing so. The cancellation notice period varies by provider.

What are the consequences of missing a car, home or life insurance payment?

Missing insurance payments for any type of coverage comes with serious repercussions. This can include policy cancellation, higher premiums, difficulty securing insurance in the future and sometimes credit score implications. 

Here are the consequences for auto, home and life insurance:

*Grace periods and cancellation notices vary by insurer and by province. Check your policy to confirm the duration of your grace period. 

What can I do to avoid missing an insurance payment?

If you think you are going to miss an insurance payment, notify your insurance company right away. Most providers will work with you to find a solution. If you are struggling to keep up with your payments regularly, here are some options you have: 

1. Change your withdrawal date

You can change the date your premiums are due. So, if most of your bills come out on the 1st of the month, you can move your insurance payments to the 15th. This can give you some breathing room to keep up with your premiums. 

If you currently pay premiums annually, consider switching to a monthly pay plan to avoid high upfront costs. While annual payments save you money, they can be tougher for budgeting purposes. When you receive your renewal notice, you can switch to monthly premiums. Since switching takes time, be sure to ask for this change early.

2. Reduce your coverage

The less insurance you have, the cheaper your premiums will be. Audit your policies to see if you can remove coverage you don’t need or use. For example, if you drive an older vehicle, consider removing collision insurance to save a few dollars a month. You could also opt for usage-based insurance to get personalized pricing based on your driving habits.

For life insurance, you can ask your insurer to reduce your coverage amount to suit your budget. If you do this, remember that you won’t be able to restore the coverage later. You can also switch to cheaper coverage, for example, swapping a permanent life insurance plan for term life insurance, which is typically much more affordable. This may require you to buy a new contract and cancel the old one. 

3. Increase your deductible

Taking on a higher deductible is one way to lower your rates. With home insurance, for example, you can increase your deductible to $5,000 to lower your premium. However, if you ever need to make a claim, you must be able to afford the $5,000 upfront. Before increasing your deductible, make sure you’re comfortable with taking on more financial risk. 

4. Bundle your home and auto policies 

An easy way to save is to bundle two policies with one insurer. If you already have an auto policy and a home insurance policy (either home, condo or tenant), bundling them together can help ease your payments. 

Note that while you will get a discount by bundling, it’s not always the cheaper option, as it depends on your unique profile. Compare quotes from different providers to see if bundling will get you your best deal. 

5. Suspend coverage temporarily 

If payments are too much to carry at this time, you can suspend your coverage instead of cancelling outright. For example, with auto insurance, you can choose to put your vehicle in storage for a few months to get a break on your rates. While you’ll still need comprehensive coverage to protect your car from fire or theft, removing the other coverage will significantly lower your premiums. Remember, if you remove certain coverages, you won’t be able to drive the car during that time. 

6. Take a premium holiday

With certain types of life insurance policies, you can use your cash value or investment earnings to cover your premiums. For example, if you have a permanent plan with a cash value, you can often suspend your premium payments if you’ve contributed more than the minimum and earned good investment returns. With universal life insurance, your coverage continues as long as your policy has enough savings to cover the monthly charges. Using this strategy takes the payment off your plate while still maintaining your coverage. 

7. Shop the market for quotes 

The most effective way to lower your insurance premiums is to shop around for a lower rate. When your car, home or life insurance policy is up for renewal, take a few minutes to compare quotes online and see if another insurer will offer you a lower price for the same coverage amount. It could save you hundreds of dollars each year. 

The bottom line

Insurance costs are rising across the country, making it difficult for many Canadian policyholders to keep up with premiums. If you miss a payment, your insurer will typically grant you a grace period to pay the premium. If you do not submit payment, you will receive a cancellation notice. If payment is still not received, your insurer will cancel the policy, and your coverage will lapse. This can lead to severe consequences depending on the type of coverage cancelled.

If you think you are going to miss a payment, notify your insurer right away and take steps to help lower your insurance premiums. Comparing insurance quotes online is a simple way to help lock in a cheaper rate. 

Also read:

• 15 ways to get cheaper car insurance in Canada
• A guide to moving and home insurance
• Life insurance for chronic illness in Canada: What you need to know