How a gap in your car insurance history can affect your rate

By: Zandile Chiwanza and Aya Alhakim on September 9, 2026

Updated by Aya Al-Hakim on September 9, 2026 | Originally written by Zandile Chiwanza on June 18, 2025

KEY FINDINGS

A gap in car insurance coverage is any period without an active policy, and depending on the reason and length, insurers may classify you as a high-risk driver with higher premiums.
Insurer-initiated cancellations, most commonly for non-payment, licence suspension, or fraud, are the gaps most likely to increase your next premium.
Since November 1996, Ontario has prohibited insurers from using most lapses in coverage to price a driver's premium, with limited exceptions such as non-payment and serious offences.
Driving without insurance is illegal across Canada, and in Ontario carries fines of $5,000 to $50,000, possible licence suspension, and vehicle impoundment.
You can avoid a gap by staying listed as a secondary driver on someone else's policy, switching to usage-based insurance if you drive less, or keeping comprehensive-only coverage on a parked vehicle.

Not every break in car insurance coverage will cost you. Insurers are mainly concerned with lapses caused by policy cancellation for non-payment, licence suspension, or fraud. Innocent gaps, like selling your vehicle or taking a break from driving, may not affect your premium at all, especially in Ontario.

How much a gap could impact your insurance rates ultimately depends on reasons for your lapse, length of the break, your location, and your provider.

Coverage history is one of many variables companies use to price car insurance, alongside your age, gender, commute, and driving record. Generally, the longer you've been continuously insured, the lower your premium should be, because consistent coverage signals to insurers that you're a reliable customer.

In this article:

Why would I have a gap in my car insurance coverage?
Does a gap in car insurance coverage increase your premium?
What are the penalties for driving without car insurance?
Does any gap in your car insurance history impact your rate?
How to avoid a gap in your car insurance coverage
Frequently asked questions (FAQ)

Why would I have a gap in my car insurance coverage?

A lapse in your auto insurance coverage can happen for a variety of reasons, some completely harmless. You might have sold your vehicle or decided not to drive it for a while and decided not to keep your policy active.

But in other cases, gaps in driving history may come from a revoked license, or difficulties making payments which can lead to policy cancellation.

Regardless of the reason, going without coverage for a period of time can raise red flags for insurers. Depending on how long you've gone without coverage and reasons for your gap, insurance providers may consider you a high-risk driver.

Premiums are much higher for high-risk compared to average drivers, and not every insurance provider may be willing to underwrite higher risk.

Does a gap in car insurance coverage increase your premium?

A gap in your car insurance can increase your premium, but it depends on the reason for the lapse and your location. In Ontario, insurers generally cannot raise your premium simply because you had a period without insurance. Where you're most likely to see an increase is when an insurance company initiates cancellation of your policy.

Here are the most common reasons an insurer will cancel a policy, and what each one can mean for your insurance record:

Reason for cancellation	What it means for your record
Non-payment	Failing to pay your premium can result in immediate cancellation, and future insurers may view you as a higher-risk customer.
Licence suspension	If your driver's licence is suspended, due to a conviction, for example, your insurer may cancel your policy.
Fraud or failure to disclose information	Providing false information, such as using an incorrect postal code to lower your rate, can lead to cancellation and long-term consequences for your insurance record.

Similarly, being caught driving without insurance during a lapse can lead to higher premiums when you reapply.

What are the penalties for driving without car insurance?

Driving without valid car insurance is illegal everywhere in Canada. For example, in Ontario, fines range from $5,000 to $50,000, and your licence can be suspended and your vehicle impounded, according to the Financial Services Regulatory Authority of Ontario (FSRA).

Under Ontario's Compulsory Automobile Insurance Act, penalties break down as follows:

Penalty	Details
Fine (first conviction)	$5,000 to $25,000
Fine (subsequent convictions)	$10,000 to $50,000
Licence suspension	Up to one year
Insurance consequences	A conviction can lead to high-risk classification, meaning higher premiums, or an insurer refusing to cover you, according to FSRA.

If you own a vehicle, you are legally required to have valid insurance coverage. Even if you don't own the car but drive it regularly, such as a family member's or friend's vehicle, you should make sure that you're listed on their insurance policy.

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Does any gap in your car insurance history impact your rate?

No, not every gap in your car insurance history impacts your rate. If your coverage lapsed for an innocent reason, you may not be subject to a rate increase, especially if you live in Ontario.

Since November 1996, Ontario has prohibited insurance companies in the province from pricing based on a gap in coverage. This means providers in Ontario can't use any lapses in coverage to determine a driver's premium for reasons other than non-payment and serious offences, such as licence suspension or fraud.

Here's a quick look at how different types of gaps are likely to affect your insurance rate:

Type of gap	Does it affect your rate?
Selling your vehicle or taking a break from driving	Generally, no. In Ontario, insurers can't use this kind of innocent lapse to price your premium.
Cancellation for non-payment	Yes. Future insurers may view you as a higher-risk customer, which can mean a higher premium.
Licence suspension	Yes. A suspension can lead to policy cancellation and higher premiums when you reapply for coverage.
Fraud or failure to disclose information	Yes. Cancellation for fraud carries long-term consequences for your insurance record.
Conviction for driving without insurance	Yes. A conviction can lead to high-risk classification, higher premiums, or an insurer refusing to cover you.

While insurers are allowed to consider some gaps in their risk classification systems, not all lapses are treated equally. For example, a gap due to financial hardship should not carry the same weight as one caused by a conviction for driving without insurance.

That said, it's still important not to let your insurance lapse unnecessarily by neglecting to pay your bills. It only takes a day without it to receive a fine or be on the hook for damages if you get into a collision without coverage.

How to avoid a gap in your car insurance coverage

To avoid any gaps in coverage, make it a habit to keep your auto insurance policy active, regularly updated, and shop around for the best options. If that's not possible, the next best option is to be added to someone else's existing policy.

For instance, if you're a parent and your child is a student attending school in a different city, some carriers will allow you to add them to your policy while they're away. Being listed as a secondary driver still constitutes an active insurance history.

If you're driving less than you used to, you might want to look into usage-based insurance. This type of coverage adjusts your premium based on how often and how safely you drive. There are two types to choose from:

Type	How it works	Best for
Pay-as-you-drive	Your premium is directly linked to distance driven. Less km driven, lower your premium.	Infrequent drivers or those who primarily use public transit.
Pay-as-you-go	Charges based on number of km driven; tracks factors like speed, braking, and time of day.	Drivers comfortable with telematics tracking who want their rates to reflect driving habits.

Another option is switching to comprehensive-only coverage, which protects your car from risks like theft, falling branches, or damage caused by other vehicles when you're not driving.

If you still decide to cancel your car insurance policy for any reason, make sure you contact your insurance broker or agent and ask them how it will impact your insurance history and future premiums.

Frequently asked questions (FAQ)

Is it illegal to have a lapse in car insurance?

Having a lapse itself isn't illegal, but driving without insurance is against the law. If you own a vehicle, you're legally required to have valid insurance coverage, and getting caught behind the wheel without it can mean fines starting at $5,000 in Ontario, licence suspension, and higher premiums when you reapply.

Will cancelling my car insurance policy after selling my car hurt my future rates?

In Ontario, insurers can't use an innocent gap, like one from selling your vehicle or taking a break from driving, to increase your premium. Rate impacts are generally limited to lapses tied to non-payment or serious offences, such as licence suspension or fraud.

Can I keep my car insurance history active without having my own policy?

Yes, your insurance remains active if you don't have your own policy but are listed as a secondary driver on someone else's policy. For example, some carriers allow parents to keep a child on their policy while the child attends school in another city.

What's the difference between pay-as-you-drive and pay-as-you-go car insurance?

Pay-as-you-drive ties your premium directly to the distance you drive, making it ideal for infrequent drivers. Pay-as-you-go charges you based on kilometres driven while also tracking behaviours like speed, braking, and time of day.

What should I do before cancelling my car insurance policy?

Contact your insurance broker or agent first and ask how cancelling your policy could affect your insurance history and future premiums. If you no longer need full coverage, ask about alternatives like comprehensive-only coverage or being added to another person's policy so you don't create an unnecessary gap.