Insurance company threatens dropping my HO policy after 3 claims filed in 4 years. What are my options? Krista Watters asked 2 years ago
Insurance company threatens dropping my HO policy after 3 claims filed in 4 years. What are my options?

I will try to keep this simple. I had a major house fire in 2018. Took over a year to rebuild–not wildfire related. I filed a claim in 2018 with my insurance company. First one ever in 26 years. Then in 2019 while NOT in our home due to the house being rebuilt, we had vandalism, damage on our property (no one was there). I opened another claim because I actually know who did the damage (a building owner next door) and was hoping my insurance co would go after them. The claim was small.

Now in 2022 (4 years after first claim), I had an accidental fire in my oven that filled my house with smoke. It is unlivable at this time. I attempted to contact my insurance agent to see if I should open a claim or not. In the meantime we had nowhere to live, sleep, cook, etc. I went ahead and opened a claim and started the process.

My agent finally got back to me after 10 days and said my policy may be cancelled because I have had more than 2 claims within 5 years. No one has ever told me of this rule, guideline, law, policy, etc. Or warned me not to open small claims. I don’t remember reading it ever, as I have gone over/through my original policy in 2018. So here are my questions:

1) I have 2 options – don’t submit any payments on my new claim (apparently I cannot cancel a claim already opened), and pay for everything (thousands of $$) myself. If I have no payouts, will this be reflected on my CLUE report? And will this help my cause or will it not really matter. Or should I go ahead and use all the reimbursement I need to clean, replace appliances, mitigate smoke damage, since the claim is already open?

2) The second claim opened in 2019 was because we were not living in the home due to the first claim/event. Is there a way to count that as part of the first claim?

3) What are my other options to fend off State Farm dropping my policy (I have umbrella auto and home with them).

4) Where can I seek legal or professional advice on what to do? (My policy is up for renewal in July, but with this open claim I want to see if there is anything I can do now.)

I have read all the “shopping” tips on your site, but I am afraid I may lose my house (from the bank) if I can’t have it insured. I have also read through what to do if your insurance co drops you.

2 Answers
Joel Gumbiner Joel Gumbiner Expert answered 2 years ago


I am a lawyer who litigates claims. While I am aware of CLUE, I really don’t have any special insight into how the underwriters at State Farm will view your loss history or what it will do with that. To be safe, in anticipation of a non-renewal, you should probably start talking to brokers who have access to many insurance companies. The brokers will have the best insight into what might happen with your State Farm policy (premium increase or non-renewal) and may be able to find coverage elsewhere for you. State Farm cannot cancel your policy, but it could decide not to renew your policy in July. Then again, it may just decide to renew and increase premiums. Sounds like even your State Farm agent doesn’t know the answer to that.

I know of nothing you can to do “fend off” State Farm’s decision in July. The underwriters will look at the claims at that time and make a decision on premium increase or non-renewal. You can get a jump on it though by reaching out to brokers well in advance, I suggest months in advance, of July. You might even start that process now as brokers may have some ideas for you. Brokers will know whether there are insurance companies who want your business even with you three losses.

The second claim cannot be part of the first claim. They are separate occurrences.

If you opened the third (2022) claim already, it is in the system. I do not know if dropping the claim will affect the way State Farm underwriters, or any underwriters, look at you in July. I suspect that it will be in the CLUE system as a loss either way, so you may as well continue with the claim. Again, the brokers you start talking to may have better insight than I do about that. They know the markets.

I hope this helps. Best of luck to you on this. I think you will get information you can use when you start talking to brokers who know the current insurance market.

Amy Bach Amy Bach Staff answered 2 years ago

Krista – UP shares your frustration on many levels. The fact that you’re getting penalized for using the insurance you paid for is unfair, plain and simple. The fact that insurance companies get to share and see information about each other’s customers and their claim history is also unfair – and deprives you, the consumer, of the shopping advantage of being able to patronize whichever insurer you choose. You should definitely get your CLUE report: If the neighbor was at fault for the vandalism that gave rise to your 2nd claim, your CLUE report should reflect that. But if no one (including your insurer) officially confirmed that you were not at fault – you may need to get that determination in writing from some source other than yourself. We recommend that you send a letter to your Congressional and Senate representatives asking them to reconsider whether insurers should be permitted to see a consumer’s claim history via a CLUE report – even where the consumer is not one of their customers. Then follow Joel’s guidance on working with a good agent or broker to find the best option. No question, it’s a tough situation when you have multiple incidents that damage your property.