How much will it cost to cancel my motorcycle insurance?

Most Ontario and Alberta bikers don’t use their bikes between November until about March or April. That’s pretty standard, seeing as Canada has a relatively short riding season what with the snowfall and rapid drop in temperature. As such, it can be tempting for motorists who pay for their motorcycle insurance policy monthly to cancel once riding season is over to try and save money. Unfortunately, doing so rarely results in savings, and chances are you’ll still owe money – regardless of who you’re insured with.  

TLDR; you won’t save money by cancelling your motorcycle insurance in the winter. Here’s why. 

The technical reason is that, in insurance speak, motorcycles are “rated seasonally.” What that means in English is that even though your annual premium might be split into 12 equal payments for convenience, the insurance company charges you the full annual amount between March and October. With a $2,500 annual premium for auto insurance, you might be paying around $208/month. With a motorcycle insurance policy, where ratings are done seasonally, you would be paying the same equal payment per month as you would with an auto policy, but the full annual amount would be “charged” between the active months of March-October.  

To be exact, here’s a breakdown of how they charge your motorcycle premiums:

So, if you cancel your policy after the riding season, when you might have only paid half your annual premium (six monthly installments) or a little more, you will still owe money, even if your bike is parked.

With motorcycle insurance, instead of thinking about the annual premium, it’s better to ask, “How much will it cost me to ride each month”?

Say your policy started in March of this year, and your annual premium is $2,400. Your monthly payments should be $200 a month. If you keep your policy active until it renews, that’s all you need to know. However, if you do want to cancel at some point, the math gets trickier.

As you can see, once October arrives, you’ve only paid $1,600 (8 of 12 monthly installments), but the entire $2,400 annual premium has already been charged to you. (In insurance, we would say the entire premium has been “earned”). The result is that you still owe $800. Even if you were to remove all coverage except fire and theft, it doesn’t matter. The full annual premium is still owed as it has been “used up” during the summer months.

If you cancel the policy, you will get a large bill for the remaining premium, due immediately. If you keep the policy in force, on the other hand, you can pay the amount owing over the remaining months (Nov-Feb). And hey, if there are some nice fall days, you might even get to ride a few more times before the snow comes, knowing that you and your bike are still covered.

Not to mention that if you cancel your policy in October, your bike is not protected from fire and theft during the winter months.

One thing to also be of note is that cancelling your insurance midterm or before its renewal date may result in a cancellation penalty. Your insurance company may charge a percentage of your total insurance premium (for that year.) This is called a short rate cancellation penalty.  

Usually, these fees will be between 2-7% of your total annual premium, so that same $2,500 motorcycle insurance policy could land you a $175 cancellation fee if you decided to cancel for the winter. In addition to this, you may also be on the hook for the remaining amount owed for the policy – due immediately. Taking the example from above, you’d still owe $800 if you cancelled in October, plus whatever cancellation penalty that may apply.  

*It’s also worth noting that even though Canada is notorious for seeing snow dumps as early as September, there’s also some nice fall days you could still be enjoying out on your bike, well into November. Without a policy though, you’d be stuck without that option. 

There’s more to cancelling your policy than possibly having to pay the remaining amount owed or penalty. For instance, you’ll have a lapse in continuous insurance history, which may result in higher rates in the future (or for when you try to get insured again.) You could also very well lose whatever no-claims benefits you have, seeing as you’d have lost that insurance history, which could result in future higher costs. Any loyalty discounts? Probably gone.  

If you paid extra for any kind of additional unused add-ons, like coverage for roadside breakdowns or even helmet and leathers coverage, you would not receive a refund on those. 

And, finally, your motorbike is still vulnerable even when it’s not being ridden! It could be stolen out of wherever it’s being stored, damaged by natural disasters or severe weather, or even vandalized. Without any kind of insurance, those damages or losses would come out of your own pocket. 

There are few circumstances where cancelling your policy makes sense to save money, such as if you’ve sold your bike or it’s been stolen. Under any other circumstances, you’re extremely unlike to save any money on your insurance. But all is not lost! With Mitch, there’s plenty of ways to save on your motorcycle insurance premiums. Here’s a few tips: 

Motorcycle insurance is relatively expensive when compared with other auto policies, and that’s largely due to the high rate of injuries and fatalities in motorcycle collisions. If you ride safe and keep your head on straight, you can avoid potential issues and keep your costs affordable! Enjoy the rest of the season.