how many claims until home insurance drops you
March-30-2023

Can My Home Insurance Company Drop Me After One Claim?

If you’ve ever had to file a home insurance claim, you may be wondering if your insurance company will drop you. Depending on the situation, your insurer can choose not to renew your policy after any number of claims. However, there are certain circumstances in which they cannot legally do so. In this article, we’ll discuss those circumstances and how to protect yourself from being dropped by your home insurance company.

Will My Insurance Company Drop Me for Filing a Claim?

How many claims before your home insurance drops you? While there is no set answer to this question, it is generally agreed that an insurer can only choose not to renew, rather than flat-out cancel, a policy for filing legitimate claims. Reasons for non-renewal could be related to too many claims, but cancellation or “rescission,” as it is formally called, must be based on a failure of the insured, such as failing to pay the premium or making an untrue statement. This is because insurance coverage is a contract with obligations on both sides.

Reasons Insurers Can Cancel Your Policy

Your insurance company might cancel your policy if you:

  • Fail to pay your insurance premium for a given period
  • Make a misrepresentation on your application or a claim
  • Commit insurance fraud
  • Don’t cooperate with the insurer’s requirements to permit an inspection or make repairs

A less common reason for cancellation relates to the insurance company closing its doors, becoming bankrupt or insolvent, or being declared incapable of continuing by a state regulator.

You Could Have a Bad Faith Claim

Something to note regarding insurance companies canceling policies is bad faith insurance practices. Experts warn you to be on alert for this if your policy was canceled soon after you filed a property damage claim.

Most states have unfair trade practices laws which prevent insurance companies from relying on a bad faith claim if you can prove your claim was legitimate and made in good faith. A lawsuit for unfair practices against an insurance company wrongfully asserting a bad faith claim could entitle the insured to:

  • The full value of the property damaged
  • Consequential damages related to the property damaged
  • Legal costs and attorneys’ fees
  • Punitive (punishment) damages
how many claims before home insurance drops you

What Happens If Your Homeowners Insurance Company Drops You?

If your insurance company does, in fact, drop your coverage, the first focus must be on the practical, which is finding another company as quickly as possible to prevent a lapse in coverage. Your policy will state the notice period for cancellation by the insurance company, typically one month or longer, which buys you some time.

Additionally, the company is supposed to provide a reason for cancellation. Depending on the grounds the company offers for cancellation, and after you have a policy in place and the dust settles, you may want to contact the insurance company and request additional information. At this point, an attorney’s assurance can be invaluable. An insurance claims attorney can help you ensure any overpaid amounts are refunded, the policy was not wrongfully terminated, and the insurer has fulfilled its legal contractual obligations to you.

Do You Need Legal Advice? Contact MMA Law Firm

As professionals who help clients interpret insurance policies, understand their rights, and recover on their losses every day, the attorneys at MMA Law Firm are well positioned to assist clients with insurance claims in the State of Texas, including making sure that their clients are not wrongfully dropped by their insurance providers.

Speak with an attorney today to learn more.