5 Reasons an Insurance Company Could Cancel Your Policy

And What to Do if That Happens

why an insurance company might cancel your policy: numerous claims, home in disrepair or requiring maintenance/renovation, nonpayment, criminal record, false declarations, or moral hazard, change in your financial situation

The Balance / Alison Czinkota

If your insurance company says that it is going to cancel your policy, you still have options to stop that from happening. The best thing you can do is to act quickly. Once an insurance company lets you know that it is going to cancel your policy, you have a short amount of time to get things back on track. Here's what you need to know to protect yourself from having your policy canceled.

Why Would Your Home Policy Get Cancelled?

Insurance companies are businesses, and very often people think that insurance will always be there. However, if you don't meet the conditions set forth in your policy, the company could cancel your contract. Insurers deal in risks, and being able to assess risk and avoid losses is part of how they meet their bottom line. People have issues and circumstances that often fit outside the norm. Your insurance company may cancel you for nonpayment, or it may find your situation too risky and decide to cancel your policy.

There are five main reasons an insurance company might cancel or not renew your policy:

  1. Too many claims
  2. Home in disrepair or requiring maintenance or renovation
  3. Nonpayment of policy or too many missed payments
  4. A criminal record, false declarations, or “moral hazard
  5. Change in a situation (also known as a material change in risk)

Home Insurance Cancellation Rights: How to Avoid Getting Canceled

If you find yourself under the threat of having your policy canceled, you may be feeling stressed and worried. What will you do if you can't get insurance? If your policy is canceled, you may have trouble finding insurance later or have to pay more in the long run. There are cases where your insurance may start off with plans to cancel you, but if you can explain your case, you might be able to change their mind. 


Although there is no sure way to make an insurance company keep you as a client, you can show yours that you are working with it, and try to persuade it not to cancel you.

What Can I Do if I Have Too Many Insurance Claims?

You must put forth a strong reason why you should continue to be insured if you have a high amount of claims. One of the things you should do is review the claims you have made. Ask yourself these questions:

  • How much was each claim worth?
  • What was the nature of each claim?
  • Were they related? For instance, were they all water damages or fires?
  • Did the claims all occur at the same address?
  • Has something changed that makes you “less risky”? Did you have a problem you weren't aware of that has since been fixed? Have you had a change in lifestyle, job, or situation? Did you upgrade an alarm system?

How to Present Your Case to Keep Your Insurance

The best way to plead your case is to offer concrete proof that things have changed.

Perhaps you have moved to a new area, and it was only in the old area that the claims happened. Think about every aspect of the claims you have had, and see whether there is something you can point out that shows the insurance company that your “risk” is now low.

Point out any factors that may have changed, including change of people living in the household or reasons that you may be more stable (e.g., a location or job change).


Make sure the details the company has about you on file are correct. There could be an error, so go over each claim with care to make sure they are right.

You can also try to offer ideas that reduce or remove the risk of future claims.

If nothing has changed, think about ways to improve the situation. Were you robbed twice? Perhaps offer to install an alarm system.

Were all your claims under $1,000 or $5,000? Perhaps ask the insurance company if it would allow you to ​take an even higher deductible. That way, the risk it is concerned about gets lower. It is also a way of showing that you are willing to take on added risk and responsibility yourself.

Ask whether there is a policy that could be offered to you as an alternative to what you have in the present. For ​example, if all of the claims came from water damage, perhaps there is an available policy that does not include water damage. That would allow you to have basic insurance coverage rather than no insurance or high-risk insurance.

Does Loyalty Matter When It Comes to Insurance?

Every insurer is different, and the ratio of how much the insurance company has paid out in your claims vs. how much they have been able to collect in premiums from you will come into play. It doesn’t hurt to show how stable and loyal you are. That can be helpful if you were insured for many years prior to the claims they have a problem with and didn't have any claims for many years.

Showing an Insurance Company Your Value

  • Point out how long have you been with the company.
  • Figure out how much you have you paid it over the years, not only for the policy in question but for all others. For instance, add the amount of money you have paid when you combine all your policies like your home, car, or business.
  • If you have referred friends or family, make sure ro point that out, too. Everything helps.
  • Let the company know that you are willing to take on more risk by taking a higher deductible if you can.

Getting Insurance When You Have Multiple Claims

Once you have all the facts, you should try to get insured with another company, agent, or broker. Don't forget that you have to look out for yourself and what is best for you.

Every insurance company offers diverse products, so while one might not work for you, another one will.


While you wait for their review of your case, you should check other options, especially if you’re being told you might lose your plan.

Although insurance companies will use some of the same tools to see what claims have been made in the past, the way they assess risk is diverse. You often see examples of that when you get a quote with one company, and it is much higher than another. The reason is in the diverse ways that each one works the rates and decides risks. The same may be true in how they will look at your situation.

Not every insurance company has the same underwriting rules, and if you have a solid case, you may find another one to help you. Working with a broker who deals with several companies, not just one, may also be very helpful. The most important thing is to have the facts and to be honest about your situation.


Make sure you do all you can to keep your insurance. Letting it get canceled or leaving yourself uninsured even for a day is a huge risk and financial burden to you. Fight to keep your home and assets insured.

How Long Will It Take for the Insurance Company to Review My Case?

Never leave this to the last minute. It can often take more than a few calls and days for the right person to be able to review the case. If you get refused after you’ve brought your case, you can ask to have it moved up to a manager or person in charge at the company for review. It could take more time. The fact that you are taking control of the situation and want to protect your coverage by pleading your case is a plus.

Make sure you bring your case to the proper people, and you may be able to negotiate some policy terms that will help you stay insured and protected.

Frequently Asked Questions (FAQs)

How many insurance claims can you file before you get canceled?

There's no set number of claims that an insurer allows before it decides to cancel your policy. It will also depend on the severity of the claims and is usually based on claims activity during a certain period of time, such as 36 months.

Why are my insurance rates going up?

Your insurance rates can increase for various reasons. It may be due to an increase in claims on your part, but it could happen if your insurer does a general rate adjustment for the type of coverage you have. If costs associated with repairing or replacing your insured property increase, that could affect your rates, too. Moving your car to a new ZIP code or state could even cause a rate change.

Was this page helpful?
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. NAIC. "A Consumer's Guide to Home Insurance."

  2. United Policyholders. "Mid-Term Cancellations by State."

  3. Independent Insurance Agents of Texas. "Policy Cancellation and Nonrenewal."

  4. FICO Insurance Scores. "About Insurance Scores."

  5. Rocky Mountain Insurance Information Association. "How to Avoid Non-Renewal on Your Homeowners Insurance Policy."

  6. United Policyholders. "Dropped by Your Insurer? Where to go for Help in California."

  7. Consumer Financial Protection Bureau. "Comprehensive Loss Underwriting Exchange."

Related Articles