Think your policy just expired? It might be cancelled — Learn the difference

Car insurance is something that no car owner should take lightly, especially in the Philippines, where it is a legal requirement. However, getting your car insured is not a one-time thing, as it needs to be renewed annually - if not, your coverage would lapse and you’ll be left vulnerable with all financial burden on your shoulders in case of an accident or any unfortunate incident.

Therefore, after obtaining a car insurance policy, a car owner needs to take care of certain things, including ensuring there are no coverage gaps. Now, the latter could be due to either policy expiry or policy cancellation. The two are very different things, and as a car owner, it is essential to understand the difference between an expired and a cancelled policy.

Furthermore, it is a typical scenario in which a car owner assumes that their policy has just expired; in reality, it has been cancelled—the difference could mean thousands of pesos in unexpected costs and even legal trouble. It is thus crucial to determine whether your policy has expired or been cancelled.

In this article, we’ll discuss all about car insurance policy expiry and cancellation—meaning, causes, and corrective steps. Thus, ensuring you stay compliant with the LTO and protected in the event of an accident or loss.

So, without any delay, let’s get started …

Car insurance & renewal

Before diving into the difference between expired and cancelled insurance policies, it is essential to understand what car insurance really means.

Car insurance is an annual contract between the policyholder and the provider, in which the provider offers the policyholder financial coverage for a premium. Speaking about insurance costs, aka the premium, it depends on the level of protection chosen. In the Philippines, car insurance coverage is divided into CTPL, comprehensive, and add-ons, each offering different levels of protection. The table below gives a brief -

CTPL (Compulsory Third Party Liability) insurance	Required by the LTO, it covers bodily injuries or death of the third-party caused by an accident involving the insured vehicle.
Comprehensive insurance	Optional coverage that is highly recommended for its wide range of coverage against car theft, fire, damage, etc.
Add-ons	Optional coverage that offers protection based on your requirements. A few common examples are Acts of God, Personal Accident, and Roadside Assistance.

Car insurance renewal

Most car insurance policies in the Philippines have a limited shelf-life, usually a year; thus, timely renewal is a must. To prevent coverage gaps, providers sent renewal reminders via email or text a few weeks before the expiry date. To continue with the policy, all you need to do is pay the renewal premium and keep your coverage active.

What if you fail to comply with insurance requirements or miss premium payments? This could lead to policy expiry or outright cancellation.

Also Read: 6 Smart ways to never forget your car insurance expiry date

Car Insurance Policy: Expired vs. Cancellation

Now that you have a fair idea about car insurance, premium, and renewal, it is time to get to the real deal, i.e., Policy Expiry vs. Policy Cancellation.

Expired car insurance policy

What is an expired policy?

An expired policy indicates the end of the insurance period, which is usually one year from the issue date. If the policy is not renewed before or on the expiry date, it becomes invalid. The concept is similar to that of your car registration, which lapses naturally after the expiry date and thus requires timely renewal.

Consequences of an expired policy -

There are several risks associated with driving a car with an expired insurance policy. A few are listed below -

• An expired policy means there is no coverage available—whether third-party liability or protection for the car owner, passengers, or the insured vehicle.
• In case of an accident or theft, the entire financial burden will fall upon the car owner, as all claims would get denied by the provider on the pretext of an expired policy.
• An expired policy means no CTPL insurance, which is not compliant with the law. Further, without this mandatory insurance plan, you won’t be able to renew your vehicle registration, which is again a must.

Common reasons for an expired policy -

• The policyholder misses the renewal of the policy
• Lack of funds required for policy renewal
• Miscommunication between the insurer and the policyholder
• The policyholder is in the middle of making a switch to a new provider

Note that when a car insurance policy expires, there is no coverage against accidents, but a policyholder usually gets to renew the policy without any penalties—if they act promptly and the lapse isn’t too long. As long as the premium is considered, chances are you’ll enjoy the same rates as before.

Also Read: Philippines car insurance expiry FAQs: Renewal, grace periods, and more

Cancelled car insurance policy

What is a cancelled policy?
It means your insurance policy was terminated before its expiry date. It is obviously a severe situation: during the cancellation period, you have no coverage at all, and getting a new policy isn’t easy.

Note that the policy can be cancelled by both the insurance provider and the policyholder.

Consequences of a cancelled policy -

• The policyholder faces coverage gaps and limited provider options for reapplication.
• Losses only on No Claim Bonus benefits

On the contrary, if a policyholder cancels the policy, the insurer loses a client and earns a bad reputation in the market and poor reviews.

Common reasons for policy cancellation -

• Providing false information or misleading the insurer
• Not paying the premium
• Failure to submit documents or update vehicle ownership information
• Misuse of coverage or vehicle (using a private car for commercial purposes)
• Failure to disclose previous accidents
• Submitting an invalid or expired driver’s license

Furthermore, a policyholder can also cancel their car insurance policy if they are not satisfied with the provider and want to switch. Common reasons for dissatisfaction can be poor customer service and complex claim processes.

Checking the status of the policy: Cancelled or Expired

If you are in doubt about the status of your car insurance policy, it is recommended that you check with your insurance provider or agent. You can do so by calling or emailing the relevant authority to request your policy status. In today’s digital world, some insurers even allow clients to check the status via their official website or dedicated mobile application.

Alternatively, policyholders can use third-party InsureTech apps to verify the policy's validity. All you need to submit is your policy number and/or coverage period, both of which are mentioned in the policy documents.

Steps to follow if your policy expires or is cancelled

Now that your policy has expired or been cancelled, it is time to take the next necessary steps. So, let’s get started -

What to do if your policy expires?

• Get your insurance policy renewed as soon as possible. Most providers allow late renewal within the grace period. Note that a prompt renewal helps avoid coverage gaps and ensure continued protection.
• Get your car inspected, as some providers require a quick inspection before renewing the policy.
• Make sure not to drive while your policy is expired, as even a minute's drive without coverage could prove costly.

What to do if your policy gets cancelled?

If the policy is cancelled, there are two essential steps: reapplying for car insurance and preventing future cancellation. Let us discuss each one one by one.

Reapplying for insurance -

This involves requesting an explanation and, if possible, negotiating reinstatement. This would include submitting a new insurance application form, providing updated vehicle information, required documents, and settling outstanding dues.

In some cases, you might need to switch to a new provider and explain the reason for cancelling your previous policy.

Tips to prevent future policy cancellation

• Avoid providing incomplete or false information
• Set up calendar reminders and/or auto-payments for renewal
• Practice defensive driving
• Don’t skip calls or messages from your provider

Also Read: What's not covered under your car insurance policy?

Non-active insurance policy and its impact on claims & LTO registration

It is well known that driving an uninsured car in the Philippines is illegal. Furthermore, it severely impacts policyholders' LTO registration and insurance claims. How?

You see, your vehicle registration with the LTO cannot be renewed without an active CTPL insurance policy. Moreover, if you get into an accident during the period when your policy expires or is cancelled, you won’t be able to file a claim and will have to bear all the repair & medical expenses.

Also Read: Can AI predict your car’s insurance premium? Let’s find out

Bottom line

It is crucial to keep your insurance policy active at all times - an expired or cancelled policy is strongly discouraged and puts you at risk. The minute you learn of such an issue, it is best to act immediately. It is not wise to wait until something bad, like an accident or theft, takes place, because then all the liability will fall on your shoulders.

It is suggested that you renew your policy on time, be transparent with your provider, and keep the vehicle legally protected.

Also Read: Your go-to guide for car insurance renewal in the Philippines