In California, can an insurance company legally cancel a homeoners association policy for 2 claims in 3 yrs?

Question

The policy is written on a building in Los Angeles containing 4 condominium units. In the first claim, the insurance co. defended the HOA against a negligence lawsuit in 2004 that was later dropped without going to trial, so no money was paid out.

We are pondering making a second claim in 2007 involving water damage to the building. Whether the insurance covers the water damage is a separate issue I don't want to get into. I just want to know if after making two claims in three years the company would have legal grounds for cancelling us; or whether insurance companies are known for finding reasons to cancel, whether legal or not. No fraud is involved here.

Answer 1

Yes. Usually the amount paid out is irrelevant, because there are CLAIM COSTS - the cost for the insurance company to defend.

Homeowners associations are COMMERCIAL policies, not subject to the protections of homeowners insurance. Most of the time, they don't NEED legal grounds to cancel, they can just non-renew the policy.

You need to talk to your agent. If you have serious doubts as to whether the water damage will be covered, like, if it was FLOOD damage, there is NO WAY I'd file that claim. But your agent should be guiding you in this.

Answer 2

There's a difference between cancelling a policy and not renewing a policy.
Cancelling means they are terminating the contract before the renewal date. If the insurers wish to cancel the contract, they must cancel for a reason that is allowed under the conditions of the policy. They cannot cancel a policy because they feel like it. An insurance contract, is like any other contract (well, actually it's a little more than that), and you cannot break a contract without a valid legal reason, or else you are in breach of contract. So if they are cancelling the policy, they have to give a valid, legal reason why.
Not renewing a policy, however, means that at the end of the current policy term, the policy will not be renewed for another term (whether the same term or a modified one), but the current policy has to be honored to it's full term. Neither the insured nor the insurer is obligated to offer or accept a renewal.

Answer 3

Insurers are not prevented from law by canceling for even one claim. That said, I would say it is unlikely that your insurer would cancel you for 1 liability claim and 1 damage claim in a three year period, especially for an association policy.

My advice would be to have a conversation with your agent. They know their company best. You don't need to mention that you have a possible claim pending. You can just say that you want to protect your policy and want to understand what happens in the even of claims so that you can make decisions that will prevent policy cancellation. You might also ask about policy deductibles, and see how much your association could save by taking a higher one (sometimes it is well worth it). Also, you can ask about the types of claims that are covered, asking about several examples (including your water damage scenario) t o get a better idea of when coverage would apply.

In my opinion everyone should have a conversation like this with their insurance agent. The more you understand now the better off you are.

Good luck!

Answer 4

certain they can do this. It discourages frivolous claims. maximum regulations state both countless claims or dollar volume that ought to steer on to being dropped or change in insurance quantities. My make sure's filed a declare for water damage via a defective water heater and it change into the 0.33 declare in 5 years (one change right into a outbuilding that change into damaged in a hurricane won't be able to remember the different) and they were given a letter conserving as a change of a $250 deductible, they have a 10% ded now. After 35+ years of insurance with this business business enterprise. obviously they're ticked notwithstanding it truly is interior the agencies rights to attain this.

Answer 5

In CA, an insurance policy can only be cancelled for non-payment....so NO, they can't cancel you for filing a claim, but they can raise your rates based upon the # of claims you file.