Drop it Like it’s Hot: Can Insurance Companies Drop You After a Claim?

Are you sure you want to make that call?

You just got in a car accident. Now it’s time to call your insurance company to make a claim. But wait! You’ve heard somewhere that the moment you make that call, they'll drop you as a client.

Does this mean you'll lose your coverage? Will you now be considered a high-risk individual (which is terrible for you, even though it sounds badass)? Should you still file this claim?

First, let’s get the big question out of the way. Can an insurer drop you immediately after a claim? Yes, they can. After all, they only make money if policyholders pay premiums without making claims. 

So, if you’re deemed too risky, it won't be good for their business to keep insuring you.

Still, for them to drop you immediately, it should be for a very good reason. Here are some of them:

• A DUI (driving under the influence) or DWI (driving while intoxicated) conviction

• Loss of driving privileges (suspension of your driver’s license)

• Insurance fraud

• Filing too many claims

• Nonpayment or late payments

Despite the reasons above, most states have laws against insurance companies who cancel policies without warning. In the Carolinas, they must give 30 days' notice and explain why if the policyholder requests one.

Now, if they decide not to drop you immediately, they will most likely opt not to renew your policy. You’ll still be insured until the end of your term, but you’ll have to shop around to get the coverage you need.

What if your case is not as severe as the ones above?

If you’re not at fault, you get to claim without repercussions. If you’re at fault, the most likely scenario is that your premium will increase upon renewal, especially if you make several claims within a certain period of time, usually three years. And these higher premiums could stay on your record for three years. Yes, they seem to think in threes.

So, to avoid getting dropped, rejected upon renewal, or charged higher premiums, it’s probably best to avoid hitting other objects while driving.