When a driver is involved in accidents and makes “too many” claims, an insurance company can cancel a policy, or non-renew the policy at the end of its term. The insurance company has to look at whether or not the claims are legitimate. Another thing they will look at is your driving record.
Getting into an automobile accident can be a nerve rattler, to say the least. However, getting into a second or third accident within a short period of time can ratchet up those stress levels quicker than… well, let’s just say really, really quickly. One reason for this is that people begin to worry about how multiple claims will affect their auto insurance. They’re afraid that their rates will skyrocket or that their policy might even be cancelled. Which brings us to this question: How many claims can I file with my insurance company before they cancel my policy?
Cancellation vs. Non-renewal
The good news is that it is highly unlikely that your insurance company will cancel your policy because of multiple claims. The bad news is that multiple claims may cause your insurer to raise your rates or decide to not renew your policy at the end of your current policy period. So, the first order of business is to be clear on the difference between cancellation and non-renewal.
Cancellation
Cancellation refers to the termination of your insurance prior to the end of the policy period. If your insurance company is going to cancel your policy, it will likely do so within the first 60 days of the policy period due to some form of misrepresentation or false information given by you on your application. The most likely reasons for you insurer to cancel your policy after 60 days are non-compliance with the terms of your policy or non-payment of your premium. Filing several claims, however, will not result in the cancellation of your policy, as long as the claims are not fraudulent.
Non-renewal
As you might expect, non-renewal refers to being dropped by your insurer at the end of your current policy period. There are many reasons why you might be dropped. In fact, in most cases, you can be dropped for any reason except age, race, gender, color, marital status, occupation, or physical handicap. Remember, however, that insurance companies are in the business of signing and keeping clients and will only drop you if they determine that you are a “high-risk” driver.
Reasons for Non-Renewal
Typical reasons for an insurer to drop you include:
- Bad driving record.
Insurance companies pay attention to your driving record. If you accumulate a high number of traffic violations over a short period of time, your insurer may decide that you are too great a risk and drop you as a client.
- DUI or DWI.
Drivers with a DUI or DWI conviction are always considered a greater risk. This is a big reason for non-renewal.
- Delinquent premium payments.
- Fraudulent claims.
These last two categories were discussed above. If they are good enough to cancel your policy, they’re good enough for non-renewal.
- Too many at-fault accidents.
If you’ve been involved in more than two accidents within a three-year period for which you are liable, you may be dropped.
- Too many claims.
This is the one we’re most interested in here. Your insurance carrier may consider dropping you simply because you file too many claims regardless of severity or fault. The simple truth is that insurers are in the business to make money and if they have to pay out more to you than they are bringing in from your premiums, they will probably drop you from their rolls.