Will My Auto Insurance Company Cancel Me For Filing a Claim?

Sean K. McQuaid | Car Accidents | March 20, 2024

Drivers worry that if they file a claim with their car insurance company, their policy might get canceled. This fear can stop people from using the benefits they’ve been paying for. It’s important to understand how filing a claim affects your policy and whether insurers have unjustly canceled your policy.

Can Your Car Insurance Company Cancel Your Policy After You File a Claim?

A question often asked by policyholders is, “Can my car insurance company cancel my policy if I file a claim?” While the answer to this question is not straightforward, insurance companies cannot cancel policies arbitrarily. It depends on your specific circumstances and the terms and conditions stated in your insurance agreement.

Factors That Affect the Insurance Company’s Decision

Several factors can influence the decision of an insurance company to cancel a policy after a claim:

Frequency of claims: If you have made multiple claims within a short period, it may raise concerns with your insurer.
Severity of claims: Significant incidents that result in expensive payouts might cause an insurer to reassess the level of risk.
Your driving record: A history of traffic violations can be viewed as an indication of risky behavior.

Understanding Car Insurance Policies and Coverage

Let’s examine the types of policies and their purpose.

Types of Car Insurance Policies

Liability Insurance: This covers costs if you’re legally responsible for an accident. It includes bodily injury liability for medical expenses and property damage liability for repair or replacement costs.
Collision Insurance: This pays for damage to your car resulting from a collision, irrespective of who was at fault.
Comprehensive Insurance: This provides coverage against non-collision-related incidents, such as theft, fire, or vandalism.
Uninsured/Underinsured Motorist Insurance: This kicks in when the at-fault driver doesn’t have sufficient insurance to cover your expenses.

Insurance Company’s Limitations in Canceling Policies

Both the driver and insurer have rights and responsibilities and it’s important to know what’s what.

A quick note on fault:

Florida operates under a no-fault car insurance system. This system first requires your insurance to cover medical bills and lost wages through Personal Injury Protection (PIP) regardless of who was at fault for the accident.

Here are some key limitations that insurance companies have when it comes to canceling policies:

Policy Non-Cancellation Due to Accidents: An insurer may not cancel a policy solely due to an accident unless the insured was substantially at fault. This protection ensures that minor or non-fault accidents do not unfairly impact an individual’s insurance status.
Written Notification Requirement: Should there be a premium increase, policy cancellation, or non-renewal owing to the insured being substantially at fault in an accident, the insurer is obligated to notify the insured in writing. This transparency is crucial for maintaining fair communication between the insurance company and policyholders.

Scenarios Protecting Insured Individuals:

There are specific situations where insured individuals are protected from policy cancellation:

When an operator involved in an accident was lawfully parked
If reimbursement by a responsible party occurs
In events where a vehicle is struck from behind or involved with a hit-and-run driver (reported within 24 hours)
Situations where the insured is not convicted of a moving traffic violation, whereas another party involved is convicted
Circumstances leading to a court’s final adjudication of non-liability for the insured

Limitations on Renewal Refusal:

Insurance providers have latitude in refusing policy renewal based on accident history. However, this refusal cannot be based on a single at-fault accident within three years; it typically applies when three or more accidents occur within this timeframe, regardless of fault.

Discrimination in Insurance Practices:

Laws are in place to prevent discrimination based on factors such as age, sex, marital status, or physical disabilities when determining insurance premiums. These regulations ensure fair treatment for all individuals seeking insurance coverage.

Being Notified About Policy Changes or Cancellation

An insurance company is legally bound to communicate any changes in policy terms, such as premium increases or policy cancellations, to the insured party in writing. This ensures transparency and allows policyholders to:

Understand the specifics of any changes made to their insurance contract.
Prepare financially for any increased costs associated with premium adjustments.
Exercise their rights and make use of a St. Petersburg car accident attorney to appeal the changes within a specified timeframe.

Legal Framework Governing Notifications:

The notification requirement is part of consumer protection measures within insurance law.
It upholds the principle that policyholders must be informed of significant developments affecting their coverage.

By adhering to these obligations, an insurance company respects the rights of the insured and maintains a clear line of communication. This approach also mitigates potential disputes related to sudden and unanticipated policy alterations.

Renewal Refusal Based on Accident History

The world of car insurance is about business and the bottom line and they’ll find ways to avoid paying out claims. Insurance companies have the right to deny renewing your policy based on your accident history. Understanding this can help you take steps to prevent it or when to hire a St. Petersburg car accident attorney if it does.

Here are the key points you need to know:

One At-Fault Accident: If you have been involved in just one at-fault accident within three years, an insurance company cannot refuse to renew your policy.
Three or More Accidents: However, if you have had three or more accidents within this timeframe, regardless of fault, the insurance company can choose not to renew your policy.

By understanding these rules, you can:
Maintain a good relationship with your insurance provider.
Recognize the importance of safe driving habits.
Understand how your driving behavior can affect your ability to get long-term insurance coverage.

It’s crucial to be aware of these insurance company limitations and how they can result in renewal refusal based on accident history. This knowledge will help you navigate the complex relationship between insurance companies and their customers.

Additional Premiums and Cancellations for Traffic Infractions

When it comes to non-criminal traffic infractions, insurance companies have specific powers under the law that governs car insurance policies. These powers are balanced by consumer protection measures and include:

Authority to Charge Additional Premiums: Insurers can charge extra fees to policyholders who commit traffic infractions. This depends on how often the violations occur and how serious they are.
Cancellation of Policies: An insurance company can end a policy if the insured person commits multiple infractions within a certain period of time. For example, getting a second infraction within 18 months or a third (or more) infraction within 36 months may lead to cancellation.
Speeding Violations: If you drive significantly over the speed limit (more than 15 mph), you may face extra charges or even have your policy canceled.

Both the insurance company and the policyholder have responsibilities in these situations:

Insurance Company Rules: Insurers must provide clear evidence or reasons for any extra fees, cancellations, or decisions not to renew a policy because of traffic infractions.
Informing the Policyholder: People who have car insurance have the right to receive written notice about any changes to their policy, such as higher premiums or cancellations.

Providing Proof of Fault or Justification

When a policyholder faces cancellation or non-renewal of their auto insurance policy following a claim, the burden of providing proof of fault or justification rests with the insurance company. The legal framework that governs car insurance cancellations safeguards consumer rights and outlines strict guidelines for insurers.

1. Evidence Required by Insurers

Insurance companies must furnish complete and convincing evidence to support their decision to cancel or not renew a policy. This is crucial in ensuring transparency and fairness in their actions.

2. Consumer Protection Measures

Regulatory measures protect insured individuals from arbitrary decisions by insurers. These measures dictate that an insurer must clearly justify any cancellation or increase in premiums based on substantial evidence of the insured’s fault in an incident.

3. Rights and Responsibilities

Both parties have distinct obligations – the insured must adhere to the terms of the policy, while the insurer is obliged to follow due process before making any changes to the policy status.

Protection Against Discrimination in Insurance Practices

Discrimination in insurance practices undermines the integrity of the system and is legally prohibited. The legal framework that governs car insurance cancellations includes stringent consumer protection measures to ensure fair treatment of all insured individuals. Key rights and responsibilities are delineated clearly for both parties involved:

Insurance Company Limitations: Insurers are restricted from basing their decision to charge additional premiums, cancel, or refuse policy renewal on discriminatory factors.
Notifying Insured: Obligations are placed on insurers to inform policyholders in writing about any changes in their policy status due to substantial fault.
Renewal Refusal: While insurers may refuse renewal based on accident history, this cannot be done arbitrarily and must adhere to specific guidelines that prevent discrimination.
Discrimination: Explicit laws exist that prohibit unfair discrimination based on age, sex, marital status, or scholastic achievements when setting insurance premiums.