Can My Insurance Company Drop My Homeowners After One Claim?

Not only can you lose your coverage if you make a claim, you may have a hard time finding a new policy. The Comprehensive Loss Underwriting Exchange service makes your claims history available to other insurers, who can decide to write you off as a bad risk. Even if you don't lose coverage, your insurance premiums may spike upward. The risks to your house may be exactly the same as before you filed a claim, but that doesn't protect you.

Even if you haven't filed a claim, insurers may decide you're too risky to keep. After Hurricane Andrew hit south Florida in 1992, causing $26 billion in damage, homeowners around the state saw rates rise. Many insurers tried to cancel their Florida policies completely, only to have the state government prevent them. Another risk is that the CLUE database also tracks specific properties and their claims history. Even if you have not filed a claim, your house may have a history that your insurer objects to.

The insurance-advice group United Policyholders recommends you pay for damage yourself if you can afford it. Even asking about whether you're covered can set insurers panicking that you're going to cost them money. One option is to take out the biggest deductible you can afford. That reduces both your premiums and your need to file claims. You can ask your insurer about its cancellation policy, but the company may not have one, and doesn't have to tell you if it does.

If you believe you deserve better treatment, contact the insurance company or your agent and see if you can work things out. If not, you can file a complaint with your state department of insurance or take your case to court. This can take time and -- if you go to court -- money, and success is often a long shot. Looking for a new carrier may be a better bet. Contact your state insurance department for the names of companies licensed to do business in your area and start calling.