Can insurance company cancel your policy for too many (2) claims even if they did not pay one of them out?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Mar 19, 2015

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Insurance Question from Metairie, LA

Asked on 03/19/2015

Can insurance company cancel your policy for too many (2) claims even if they did not pay one of them out? Parents in New Orleans had there insurance policy canceled for too many claims. The insurance company didn't even pay out one of the 2 they calling a claim. Is this legal?

Answer given on March 27, 2015

Homeowner insurance companies have different standards regarding claims history, and how they underwrite for excessive claims.Even though your parents homeowner insurance company only paid on one claim, if they reported the claim to the insurance company, then it would be considered a claim on the record. You did not explain if the claim was withdrawn or if it was below the deductible. While it really does not matter to most insurance companies, withdrawing the claim can sometimes be argued as not being a claim. If the claims occurred in a close time frame, that would raise a red flag to the company. Also, if the policy has not been in force for very long, that too can present a concern to the insurance company.Your parents may try to see if the insurance company will accept a higher deductible rather than cancelling the policy, presuming they can afford a higher deductible.

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