Home Insurance Cancellation Penalty?

by Jane C.
(Kitchener, ON, Canada)

My five-plex in an older home had been insured by Company A for 16 years, during which I never made a claim. After I was encouraged to upgrade to replacement cost, a home inspection was ordered, with the resulting demand to contract for total removal of all knob and tube and galvanized plumbing in the building within 45 days. After finding out that neither the Electrical Safety Authority nor the Insurance Brokers Association of Canada support the demand for removal of knob and tube in the walls, I asked my broker to approach the company about reconsidering their demand. After two weeks of not hearing back from either, I found a that Company B would insure the property provided the electrical was brought up to ESA standards. I agreed to this, had the work done immediately. I took a policy with Company B, and sent a signed Cancellation of Insurance to my broker for Company A, with a request for reimbursement of the unused portion of my premium (103 days). Company A has now sent a cheque for an amount somewhat over $100.00 short of my own calculation, which was basically premium, divided by 365, and multiplied by 103. Company A's statement does not specify a cancellation penalty, but I'm thinking a penalty must be built in to the statement. Would this be usual? If so, would this be fair, or even legal considering I was pretty pressured into cancelling? Can you give me advice on how should I frame my question to Company A about this issue?


Regards,

Jane C

Home Insurance Cancellation Penalty


Hi Jane
Sorry for the delay. What Company A likely did was issue a refund using a "short rate" cancellation instead of a pro rated cancellation. This is a common practice when home insurance is cancelled early.

I understand your frustration because it seems they would have cancelled your coverage due to the knob and tube.

Hope that helps a little.

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Note: Always speak with a licensed insurance professional about your specific situation. This insurance information is general in nature and the policy wordings always take precedence. It is possible that there are errors and omissions in this website and www.canada-insurance-source.com, or its authors, take no responsibility.

Keep in mind that insurance licensing, legislation, and policies often vary by province and most certainly by country. Canada Insurance Source is a free information source. So use this site to gain a general understanding of insurance with your own area and situation in mind.  Make sure you review the "please read" page. Always speak with a licensed insurance professional about your specific situation.

Always speak with a licensed insurance representative about your specific situation.

This site is general in nature and there may be errors or ommissions

Please Read

Compare insurance quotes through Kanetix.ca - save time and money!