Ontario Auto Insurance Short Rate Calculator
Days Policy in Force:
0
Insurer Retains (Short Rate %):
0%
Premium Kept by Insurer:
$0.00
Cancellation Penalty (vs Pro-Rata):
$0.00
Estimated Refund Amount:
$0.00
Understanding the Short Rate Cancellation in Ontario
If you decide to cancel your auto insurance policy in Ontario before it expires (usually a 12-month term), you are typically not entitled to a simple pro-rata refund. Instead, insurance companies apply a Short Rate Cancellation Table. This is a standard method regulated under the Ontario Auto Policy (OAP 1).
The logic behind the "short rate" is that the insurance company incurs administrative costs to set up the policy, which are amortized over the full year. By cancelling early, the insurer retains a higher percentage of the premium to cover these front-loaded costs.
How the Calculation Works
Unlike a mortgage or loan calculator, this calculation relies on days in force mapped to specific retention percentages.
- Pro-Rata: If you paid $1,200 for 365 days and cancelled on day 182.5, a pro-rata refund would give you exactly half ($600) back.
- Short Rate: Using the same example, the Short Rate table dictates the insurer might keep 59% of the premium instead of 50%. You would receive less money back.
When Does This Apply?
This calculator is specifically designed for Ontario drivers considering:
- Switching insurance providers mid-term.
- Selling a vehicle without replacing it.
- Moving out of the province.
Tip: If you are very close to your renewal date, the penalty decreases significantly. However, in the first few months of a policy, the cancellation fee (the difference between pro-rata and short rate) is usually the highest.