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How to Make Sure You Never Give Insurance Companies Reason to Cancel You

Insurance is a funny thing. You pay a small fortune to have it. Then, if you have the blatant audacity actually to file a claim, the company either increases your premiums or cancels you altogether. 

Woman in home office with computer using telephone frowning

While the world of insurance can, at times, be so confusing as to be maddening, going without is simply not an option. The financial risk is just too great. But there are some things you can do to make sure you don’t stand out to the company as an intolerable risk. 

Cover the little stuff yourself 

Instead of looking for ways to recoup your premium by making lots of small claims, raise your deductibles to $500 or $1,000, and then do not make a claim unless the damage exceeds that limit.

Personal Finance expert, Liz Pulliam Weston, suggests, “The real problem with filing a small claim is that it can count against you if you ever need to file a bigger claim.” A good rule of thumb is not to file a claim if the damage is under $1,000.

No injuries? Don’t file 

If the incident is your fault and does not involve injuries, not telling your insurance company will help protect your premium. Your state may require that accidents involving property damage beyond a certain dollar amount be reported to its Department of Motor Vehicles.

Of course, you must do that if you’ve crossed the legal threshold. But if the damages are less than $1,000 and you can swing it, paying out of pocket will be cheaper than facing increased premiums for years to come. Mishaps reported to your insurer, no matter how minor, become a black mark against your record because it makes you appear to be accident-prone.

Got mold? Tread softly

If you suffer water damage and the word “mold” comes to mind, do all you can to not file a claim. Of course, you will have no choice if you’ve suffered a major disaster. But if we’re talking about the washing machine overflowing or the wet carpet smelling a bit on the moldy side, filing a claim will do more than increase your premium. It could make it impossible for you to buy a policy at all.

Home insurers are becoming mold-phobic, and even a phone report that suggests you might have a mold problem goes into a history file tied to you and the property. That could make it difficult to sell the house in the future.

Self-inflicted neglect

Think twice before filing a claim that is the result of your neglect. Most policies won’t cover damage the insurer determines was preventable if you’d only taken reasonable care to maintain the property in question. Filing a claim will only raise a red flag and add another black mark to your record.

While you might think that neglecting things like leaky faucets and roofs will eventually lead to a nice insurance claim that will pay for new carpeting and a complete paint job, think again. You’re asking for trouble if you try to pull a fast one on your insurance company.




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2 replies
  1. Ann Marie says:

    Our homeowner’s insurance was abruptly canceled due to claims from two major storms. The first storm in 2020 caused a town tree to fall on our home, requiring roof, drywall, sidewalk, and fence repairs. The insurance adjuster arrived within a day or two and we were paid quickly, and the town reimbursed our deductible. I touted the company to everyone who complained about their own insurance company. Two years later, also during Covid, the second storm caused a lengthy power outage, preventing our sump pump from working and resulting in over 6 inches of water in our basement. Although we didn’t have flood insurance we had a sump pump failure clause and were paid a flat rate that didn’t come close to covering the loss of personal items and appliances but it helped. No adjuster came and I had to send photos with my claim. A few months later I received a rude letter stating I had not complied with their request to install a battery back-up system to my sump pump. I had never received any such communication from them but I quickly hired someone to perform the work which cost nearly $1,000. When it was time for my policy renewal, I was informed that my policy would not be renewed due to excessive claims! I have now bundled with my car insurance company, which has never increased my rates after several car accidents that were not my fault. Thankfully I haven’t had to file any further claims but with the weather patterns getting worse and another old tree nearby, I’m a bit nervous.

  2. Diana says:

    We learned this the hard way! Although our insurance was not cancelled, we were trying to get renter’s insurance for a winter home and two different agents told us no one would insure us because we had 4 claims. Those four claims were actually 2 inquiries with nothing paid, and two small claims on a rider that we were not aware would even be considered claims. We were told that even an inquiry has to be listed because they need to document the “claim”, even when nothing is paid. Needless to say, we were very disappointed that our agent did not make us aware of any of this during the initial phone calls to discuss them.


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