Can an insurance company deny coverage for filing ‘too many claims’? Here’s what to know

Homeowners insurance isn’t required by North Carolina law, but having it can be the difference between paying thousands of dollars for repairs and saving money.

However, insurance companies may revoke your coverage for a number of reasons.

A Charlotte resident recently shared an experience on Nextdoor detailing losing her home insurance coverage after allegedly being told she filed too many claims.

“My insurance company is refusing to renew my insurance due to ‘frequency of claims,’” the poster wrote. “I’ve only had two claims since I purchased the house.”

The poster explained that one claim was made to the unnamed insurance company in 2019 for stolen jewelry and the other in 2022 for home weather damage.

In the post, the person asked for guidance on finding a new provider and tips on avoiding higher premiums.

Here’s what to know about protections you have in North Carolina if an insurance company denies your coverage due to frequent claims.

Can insurance companies deny your coverage for frequent claims?

In North Carolina, insurance companies can refuse to renew your coverage if you file too many claims, a spokesperson for the N.C. Department of Insurance told The Charlotte Observer in an email.

“This falls under company underwriting guidelines, which can vary from company to company,” a spokesperson for the agency said.

But how many are too many?

According to Idaho-based Falls Insurance Center, there is no set amount to how many insurance claims you can file, but filing two claims in a five-year period can cause your premium to rise. Filing more than two claims in five years can lead insurance companies to cancel your policy.

“Over two claims in the same period may affect your ability to find coverage and even lead to a canceled policy,” Falls Insurance Center stated. “This also depends on what type of claims are being filed. If these claims are valid, meaning they are not fraudulent, the insurer may consider you too high risk to insure because of the dangers posed in your area, such as extreme weather or high crime rates.”

What to do if your coverage is denied?

If your coverage gets denied, the NCDOI suggests that consumers expand their search, contact multiple Agents/Brokers, and shop around for the policy that best suits their situation or circumstance.”

You can also try improving the condition of your home to get your policy reinstated, according to the financial website Bankrate.

For example, if your home has an unstable roof or other structural issues, you can fix them before contacting your insurance provider, Bankrate says. If you cannot get another policy, the improvements on your home should help you qualify for a policy from another insurer.