Economical Insurance Cancellation Fee Guide 2025
Economical Insurance, now operating under Definity Financial Corporation, is one of Canada's oldest property and casualty insurers. What sets Economical apart is their unique tiered penalty structure for cancellations, which differs from the traditional short rate table used by most Canadian insurers.
About Economical / Definity Insurance
Founded in 1871 in Kitchener, Ontario, Economical Insurance was Canada's largest mutual property and casualty insurer before its demutualization and IPO in 2021. Now operating as Definity Financial Corporation, the company maintains its strong broker-focused distribution model while expanding its digital capabilities.
Economical/Definity is known for their unique tiered penalty structure which applies a flat percentage penalty based on how long you've held the policy, rather than the traditional daily short rate table. This approach often results in lower penalties, especially for cancellations later in the policy term.
Economical's Tiered Penalty Structure
Unlike most insurers, Economical uses a simplified three-tier system:
How to Cancel Economical Insurance
- 1.Contact your insurance broker first
- 2.Or call Definity at 1-800-265-8665
- 3.Provide your policy number
- 4.Identify which penalty tier applies to you
- 5.Get written confirmation of your refund amount
Economical Refund Timeline
- Processing time: 10-14 business days
- Broker-initiated: May be faster
- Direct deposit: 1-2 weeks
- Cheque by mail: 3-4 weeks
Tips for Economical/Definity Cancellation
- • Use the tiered structure: If you're at day 175, waiting 5 more days drops your penalty from 7% to 4%
- • Work with your broker: Your broker may be able to negotiate better terms or find pro-rata options
- • Definity vs Economical: The name on your policy doesn't matter - the penalty structure is the same
- • Check tier boundaries: Small delays in cancellation can save you significant money at tier transitions
- • Request pro-rata: Vehicle sale, total loss, or moving may qualify you for penalty-free cancellation
Economical Insurance (Definity)Short Rate Table
Official short rate cancellation table for Economical Insurance (Definity) insurance policies in Canada
Calculate Your Refund
Economical Insurance (Definity) Short Rate Schedule
Showing refund calculations based on $1200 annual premium
| Days in Force | Premium Earned % | Amount Earned | Refund Amount | vs Pro Rata |
|---|---|---|---|---|
| 1-30 days | 15.2% | $182.40 | $1,017.60 | -$131.44 (11.0%) |
| 31-60 days | 23.4% | $280.80 | $919.20 | -$131.21 (10.9%) |
| 61-90 days | 31.7% | $380.40 | $819.60 | -$132.18 (11.0%) |
| 91-120 days | 39.9% | $478.80 | $721.20 | -$131.95 (11.0%) |
| 121-150 days | 48.1% | $577.20 | $622.80 | -$131.72 (11.0%) |
| 151-180 days | 56.3% | $675.60 | $524.40 | -$131.49 (11.0%) |
| 181-210 days | 61.5% | $738.00 | $462.00 | -$95.26 (7.9%) |
| 211-240 days | 69.7% | $836.40 | $363.60 | -$95.03 (7.9%) |
| 241-270 days | 77.9% | $934.80 | $265.20 | -$94.80 (7.9%) |
| 271-300 days | 84.2% | $1,010.40 | $189.60 | -$71.77 (6.0%) |
| 301-330 days | 92.4% | $1,108.80 | $91.20 | -$71.54 (6.0%) |
| 331-365 days | 100% | $1,200.00 | $0.00 | -$55.89 (4.7%) |
About Economical Insurance (Definity) Cancellations
- • Minimum premium retained: varies by policy
- • Processing time: 2-4 weeks for refund
- • Method: Cheque or original payment method
- • Required: Written cancellation request
Pro Rata Exceptions
Economical Insurance (Definity) may offer pro-rata (no penalty) cancellation for:
- • Switching to another Economical Insurance (Definity) policy
- • Vehicle sold with proof of sale
- • Moving out of coverage area
- • Total loss claims
Ready to Calculate Your Exact Economical Insurance (Definity) Refund?
Use our calculator with your specific policy dates for an accurate refund estimate
Understanding Economical Insurance (Definity) Short Rate Cancellations
When you cancel your Economical Insurance (Definity) insurance policy before its expiration date, the company uses this short rate table to calculate your refund. The short rate method ensures Economical Insurance (Definity) retains enough premium to cover administrative costs and the risk they assumed while your policy was active.
How to Read This Table
Find the number of days your policy was active in the first column. The "Premium Earned %" shows how much of your annual premium Economical Insurance (Definity) keeps. The remaining percentage is your refund, minus any outstanding amounts.
Tips for Cancelling Economical Insurance (Definity) Insurance
- Time it right: The penalty percentage increases significantly in the first few months. If possible, wait until closer to renewal.
- Ask about exceptions: Economical Insurance (Definity) may waive penalties for certain situations like financial hardship or if you are switching to another Economical Insurance (Definity) product.
- Get it in writing: Always request written confirmation of your cancellation date and refund amount.
Why Economical's Tiered System May Save You Money
Traditional short rate tables used by most insurers calculate penalties on a day-by-day basis, with the penalty gradually decreasing over the policy term. Economical's tiered approach is simpler: you pay a flat percentage penalty based on which "tier" your cancellation falls into.
For example, if you cancel on day 179, you pay a 7% penalty. But if you wait just two more days to day 181, your penalty drops to 4%. This creates strategic "break points" where waiting a few days can save you a significant amount of money. With a $1,500 annual premium, the difference between the 7% and 4% tiers is $45 in savings.
Additionally, Economical's maximum penalty of 7% is lower than many competitors who may charge 10-15% for early cancellations. This makes Economical a more favorable option for policyholders who anticipate they may need to cancel before term end.
The Economical to Definity Transition
In 2021, Economical Insurance completed its demutualization and became Definity Financial Corporation, a publicly traded company. If you have questions about your policy:
- • Old "Economical" branded policies remain valid
- • New policies may be issued under the "Definity" brand
- • Terms, conditions, and cancellation penalties remain unchanged
- • Contact information and claims processes are the same
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