How Many Claims Can You File Before Your Car Insurance Cancels You?

Being Non-Renewed for Claims

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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 canceled.

 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.

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.

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. So, how many claims are too many?

The Magic Number.

I was hoping you’d forgotten that because the answer is: it depends. On the insurance company, on the types of accidents, even on the state where you live. When an insurance company makes the decision to renew or not renew a policy, they are going to consider several factors, one of which is the number of claims the client has made. Many preferred insurance carriers will non-renew a car insurance policy if two at-fault claims are filed within a three-year period. Really the best answer I can give you is: the less claims you make, the better; the more claims, the worse.

Ways to Avoid Being Dropped.

There are several things that you can do to maintain a “low risk” status and reduce the chances of your insurance coverage being canceled or not renewed:

  • Drive Safely.

This one is obvious. Don’t drink and drive. Follow the traffic laws. If you drive safely, you are much less likely to get into an accident or receive a ticket.

  •  Pay on Time.

Don’t get behind in your premium payments.

  • Don’t Lie.

Make sure to always be truthful in your dealings with your insurance company and, above all, don’t file a fraudulent claim.

  • Don’t Make a Claim.

If you have been in a small accident or incurred some other minor damage to your vehicle, you might want to consider paying for the repair out-of-pocket and leaving your insurer out of it. I know that this can be rather frustrating. I mean, isn’t that why you have insurance? But the bottom line is that paying for the repair yourself may keep you from being dropped or, at the very least, having your premium increased.

One final thing. Remember that auto insurance laws vary significantly from state to state. If you have been dropped by your insurer, or are afraid that you are about to be, make sure to check the laws regarding cancellation and non-renewal in your jurisdiction.