Can An Insurance Company Drop My Policy Because I’ve Filed A Property Damage Claim?

Understanding Policy Cancellations vs. Non-Renewals

Every homeowner dreads the moment they need to file an insurance claim. Whether it’s hurricane damage, a burst pipe, or a kitchen fire, the stress of dealing with property damage is often compounded by a nagging worry: “Will my insurance company drop me for filing this claim?”

The short answer is nuanced. While insurance companies can terminate your policy under certain circumstances, they cannot simply drop you for filing one legitimate claim. Understanding your rights, the regulations that protect you, and the factors that influence insurance companies’ decisions can help you navigate this complex landscape with confidence.

While insurers have the legal authority to cancel or non-renew a policy, the reasons and timing differ greatly. A cancellation means the policy is terminated before the end of the policy term. At the same time, a non-renewal takes place at the end of the coverage period when the insurer refuses to renew. Under Florida law, insurers cannot simply cancel your policy at will after you file a claim. However, they may lawfully choose not to renew at the end of your policy term if they consider you a higher risk.

When Can an Insurance Company Cancel a Policy?

Insurance companies in Florida are restricted in how and when they can cancel an active policy:

  • First 90 Days of Coverage – During this period, insurers may cancel for almost any reason, including underwriting concerns or risk evaluation.
  • After 90 Days – Cancellation is limited to specific causes such as:
  • Non-payment of premiums
  • Material misrepresentation or fraud in the application
  • Discovery of significant, uninsurable risks on the property
  • Revocation of the insurer’s authority to operate in Florida

Once this period passes, insurers typically cannot cancel your policy solely because you filed a property damage claim.

When Insurance Companies CAN Drop Your Policy

Insurance companies are permitted to cancel policies mid-term under certain circumstances:

  • Non-Payment of Premiums: The most common reason for cancellation. Most states require a grace period and written notice before cancellation for non-payment.
  • Material Misrepresentation or Fraud: If you provided false information on your application or during the claims process, insurers could cancel your policy.
  • Increased Hazard: If your property’s risk profile significantly increases beyond what was initially assessed, insurers may have grounds for cancellation.
  • Regulatory Violations: If you violate the terms of the policy or engage in illegal activities that affect coverage.

Non-Renewal After Policy Expiration

When your policy term ends, insurance companies have broader discretion to choose not to renew, including:

  • Claim Frequency: Multiple claims within a short period, typically 3-5 years, can trigger non-renewal decisions.
  • High-Value Claims: Claims that represent a significant percentage of your coverage limits may influence renewal decisions.
  • Claim Types: Certain types of claims, particularly water damage claims, may indicate ongoing maintenance issues that increase future risk.
  • Geographic Risk: Properties in areas with increasing natural disaster frequency may become non-renewable.
  • Company Strategy Changes: Insurers may exit certain markets or reduce exposure in specific geographic areas.

When Insurance Companies CANNOT Drop You

Protected Periods and Circumstances

  • Immediate Post-Claim Period: Most states prohibit cancellation or non-renewal for a specified period after filing a legitimate claim. This protection period varies by state but typically ranges from 60 to 120 days.
  • During Active Claims: Insurance companies generally cannot cancel your policy while a claim is being processed or investigated.
  • Retaliatory Cancellation: It’s illegal for insurers to drop customers simply for exercising their right to file claims or for cooperating with insurance department investigations.
  • Disaster Periods: Many states have moratoriums on cancellations and non-renewals during and immediately after declared disasters.

Single Claim Protection

Filing one legitimate property damage claim should not result in immediate policy termination. Insurance exists precisely to cover these unexpected events, and companies cannot penalize customers for using coverage as intended.

State-Specific Regulations and Protections

Insurance regulations vary significantly by state, with some offering stronger consumer protections than others.

Florida’s Unique Protections

Florida, with its hurricane exposure, has developed specific protections for homeowners:

  • Insurance companies cannot cancel policies for 90 days after paying a hurricane claim
  • Non-renewal notices must be provided at least 120 days before policy expiration
  • Specific protections exist during hurricane season
  • Companies must provide detailed reasons for non-renewal decisions

Factors That Influence Renewal Decisions

Claim History and Frequency

Insurance companies carefully analyze claim patterns when making renewal decisions.

Key factors include:

  • The “Three Claims Rule”: While not universal, many insurers become concerned after three claims within five years, regardless of fault.
  • Claim-to-Premium Ratio: Claims that exceed annual premiums by significant margins raise red flags.
  • Time Between Claims: Multiple claims in quick succession are viewed more negatively than spread-out incidents.

What to Do If Your Policy Is Dropped? 

Immediate Actions

  • Don’t Panic: Policy termination, while concerning, doesn’t mean you can’t find coverage elsewhere.
  • Start Shopping Immediately: Begin looking for new coverage as soon as you receive notice. Don’t let your coverage lapse.
  • Gather Documentation: Compile your claim history, property improvements, and any risk-reduction measures you’ve implemented.

Finding New Coverage

  • Work with Multiple Agents: Independent agents can access multiple insurers and may find coverage options that are not available directly.
  • Consider Different Insurers: Some companies specialize in customers with claim histories.
  • Explore State Programs: Most states have residual market programs for customers who can’t find coverage in the standard market.
  • Adjust Coverage Options: Consider higher deductibles or different coverage limits to improve your attractiveness to insurers.

What Can I Do if I Can’t Find New Insurance Coverage?

If you’re unable to find private insurance, you may be eligible for coverage through Florida’s Citizens Property Insurance Corporation. This is the state’s insurer of last resort and provides policies to homeowners who can’t find coverage elsewhere.

While it’s rare for an insurance company to cancel your policy due to filing a property damage claim, it’s essential to understand your rights and what you can do if you receive a notice of cancellation or non-renewal. If you’re concerned about your insurance policy after filing a claim, consulting with an insurance attorney who can guide you through the process and ensure your rights are protected may be helpful.

Would you like to learn more about handling insurance disputes or what to do if your claim is delayed? Feel free to contact our expert insurance claim lawyers with questions. Call us at 1-800-451-6786 or fill out our online contact form.