Will My Homeowners Insurance Drop Me if I Make a Claim?
Updated: August 5, 2024
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Homeowners insurance companies may cancel your policy after a claim if they find the risk of future claims too high. Insurers consider both the frequency and type of claims when deciding whether to continue coverage.
Understanding your policy and the factors that contribute to cancellations will help you take preventive measures to maintain your insurance.
Homeowners insurance can be canceled after a claim if the insurer perceives high risk.
Multiple claims within a short period increase the likelihood of policy cancellation.
Maintaining your property can reduce the risk of your insurance being dropped.
Home insurance companies can drop you after you file a claim, but it depends on the nature and frequency of the claims you've made. While it might seem unfair, insurers often assess the risk of continuing to cover your home based on these claims. Always make sure you understand your policy and communicate with your provider to avoid unexpected cancellations.
Home insurance companies can drop you for several reasons, many of which are in your control. Understanding these reasons can help you take preventive measures, address issues proactively and maintain your coverage. Here are some reasons why your homeowners insurance provider may drop you:
Multiple Claims
Filing several claims within a short period can signal to your insurer that your property is high-risk. They may decide that the cost of covering you outweighs the benefits and might choose to drop your coverage to mitigate their risk.
High-Risk Factors
Living in a high-risk area prone to natural disasters or crime can impact your insurance status. Insurers may determine that the likelihood of future claims is too high and cancel your policy to avoid potential large payouts.
Property Condition
Neglecting property maintenance can lead to insurance cancellation. Issues like a deteriorating roof or outdated electrical systems increase the risk of damage and claims. Insurers expect homeowners to keep their properties in good condition to minimize risks.
Non-Payment of Premiums
Failing to pay your insurance premiums on time can lead to policy cancellation. Insurers rely on regular payments to manage their risk and provide coverage. Missing payments indicates financial instability, prompting them to drop your coverage.
Fraudulent Claims
Submitting false or exaggerated claims can result in immediate cancellation. Insurers have zero tolerance for fraud, which undermines the integrity of the insurance system. Being caught engaging in fraudulent activities can also lead to legal consequences.
Change in Insurer's Underwriting Guidelines
Sometimes, insurers adjust their guidelines based on new data or market conditions. These changes can make certain properties or policyholders no longer eligible. Stay updated with your insurer's policies to avoid surprises.
If your homeowners insurance drops you, contact your insurer for an explanation and seek alternative coverage immediately. After understanding why you were dropped and addressing any underlying issues, you can find the best home insurance provider that suits your needs. Being proactive in securing new coverage ensures that your home remains financially protected.
Reach out to your insurance company to understand why your policy was canceled so you can address any issues that led to the cancellation and make any necessary changes to avoid future problems.
Once you understand why you were dropped, take steps to resolve the underlying problems. This might involve making repairs to your property, improving security measures or addressing any other risk factors. Demonstrating a commitment to mitigating risks can help you secure new coverage.
Take this opportunity to reassess your insurance needs. Make sure your new policy covers all potential risks and provides adequate financial protection for your home and belongings. Adjusting your coverage limits and deductibles can also help you find a more affordable policy.
Begin searching for a new insurance provider as soon as possible. Compare home insurance quotes from multiple insurers to find the best coverage at a reasonable price. Remember to disclose your previous cancellation to avoid issues with your new policy.
If standard insurers are hesitant to cover you, consider high-risk insurance options, which are designed for homeowners who have difficulty obtaining traditional insurance.
Keep detailed records of all communications with your insurers, both old and new. This documentation can be useful if there are disputes or questions about your coverage.
Review your insurance policy regularly and stay proactive about maintaining your property. Address any issues promptly to prevent future cancellations and ensure continuous financial protection for your home.
Insurance companies must provide advance notice if they intend to cancel your policy. This notice may come via mail, email or another form of communication specified in your policy. Be aware that notice periods can vary by state and reason, ranging from 15 to 60 days, so always check the specific regulations in your area.
A FAIR Plan can be a good option if your home insurance company has dropped you after you file a claim. You must give proof that you have repeatedly tried and failed to get insurance from other carriers to be eligible. Although every state has its own requirements and processes, generally speaking, the property must be kept up well to be eligible.
Unlike standard homeowners insurance, these plans offer minimal coverage to guarantee financial security against particular risks like:
Because FAIR plans concentrate primarily on particular hazards, they provide more limited coverage than standard home insurance policies. The typical home insurance coverages excluded from FAIR plans are:
Filing a homeowners insurance claim initiates a process that involves several key steps. Here's what to expect to help you navigate the process smoothly and ensure you receive the appropriate compensation.
After you file a claim, your insurance company will assign an adjuster to contact you, who will gather details about the incident and schedule an inspection of the property.
The adjuster will visit your property to assess the damage and document it through photos and written reports. Be prepared to provide any additional information or documentation they may require.
Based on the inspection, the adjuster will create an estimate for the repair or replacement costs. This estimate is then reviewed by the insurance company, which will approve or adjust the amount.
Once the estimate is approved, the insurance company will issue a payment to cover the repair costs. Depending on your policy and the extent of the damage, this payment may be issued in installments or as a lump sum.
After the initial payment, the insurance company may follow up to ensure that repairs are completed satisfactorily. Keep all receipts and documentation related to the repairs for future reference.
Filing a homeowners insurance claim can lead to an increase in your premiums. Insurance companies view claims as indicators of risk, and multiple claims can significantly impact your rates. To mitigate potential increases, consider raising your deductible or implementing safety measures to reduce future risks. Always weigh the cost of filing a claim against the potential increase in premiums.
Below are some frequently asked questions to help you understand how claims can affect your insurance status.
It's possible, but not guaranteed. Insurers may choose to drop you if they perceive you as high-risk due to multiple claims or the nature of your claim.
There’s no set number, as it varies by insurer. However, making multiple claims within a short period can increase the likelihood of your policy being reviewed or canceled.
Maintaining your property, addressing risk factors, discussing your situation with your insurer and understanding their policies can help you prevent cancellation.
About Mark Fitzpatrick
Mark Fitzpatrick is a Licensed Property and Casualty Insurance Producer and MoneyGeek's Head of Insurance. He has analyzed the insurance market for over five years, conducting original research and creating personalized content for every kind of buyer. He has been quoted in several insurance-related publications, including CNBC, NBC News and Mashable.
Fitzpatrick earned a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his knowledge of economics and insurance to bring transparency around financial topics and help others feel confident in their money moves.
