Termination of an insurance contract typically occurs in one of
three circumstances: by natural expiry of the time period specified
in the contract, by mutual agreement between insurer and insured,
or by unilateral procedure of the insurer. The last of these
circumstances may become contentious with an insured, especially
when an insured has to find new coverage or experiences a
subsequent loss.
Canadian courts have consistently found that either party to an
insurance contract containing statutory conditions governing its
termination may terminate coverage arbitrarily and without stated
reasons, provided that the cancellation complies strictly within
the terms of the condition. [See for example Confederation Lincoln
Mercury Sales Ltd. v. Prudential Assurance Co. 1986 I.L.R.
1-2065]
