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Can My Home Insurance Company Cancel My Policy After A Claim?

The simple answer is yes but there is more to it than that. This is a common frustration by insurance consumers because they wonder why do they pay for insurance if they can't use it. Trust me you are not alone in this thinking and many more people will face the same question.

The reason why home insurance companies cancel your policy after a claim is due to a number of factors including:

  • Insurance company profitability in that geographical area
  • Recent catastrophic losses such as tornadoes or hail storms
  • How many claims you have filed in the past 5 years

Those factors determine if the insurance company is making money in that state and the long term profitability of the home insurance policies in that state. Many states like Colorado, Oklahoma, Texas and Kansas have weather that is considered catastrophic to the insurers. Storms can include hail, wind and freezing temperatures which cause millions of dollars in claims each year. The more often and massive these storms become the lower profit an insurance company can achieve. You should not have to worry about how profitable a company is but the truth is that a company will take action to avoid losing money which in some cases is non-renewing your home insurance.

There is good news which is there are always other home insurance companies in the state which are looking to take new customers. These companies have either planned better or just got lucky with the weather and are able to offer a cheaper policy than the other companies. Here are three ways to avoid getting your home insurance cancelled:

  • Only make a claim if the damage is severe enough to warrant the use of insurance
  • Try not to have more than two claims in a 5 year period
  • Ask for an expert to inspect the damage prior to making a claim so you don't have it on your claim history even if you never complete the claim

If your insurance company has notified you that they will be canceling your insurance on renewal you do have options to keep it in force. In most cases the insurance company is aware of damage to your home that has not been corrected which is why they no longer want to insure it. You have the choice to get it repaired prior to the renewal date of the policy and provide proof so they will continue coverage. If you don't correct the problem it is likely going to be an issue when shopping for insurance at another carrier. This happens often when someone takes the money from a roof claim and does not actually repair the roof.

Worst case scenario look for another home insurance provider! We can help you compare rates from top insurance companies nationwide and in most cases save you money. The insurance companies go through good and bad years so it is always a good idea to compare quotes each year to make sure you are getting the best deal.