Home Insurance Be Canceled While Claim Is Still Open

Home Insurance Be Canceled While Claim Is Still Open

Imagine this: your home suffers major water damage due to faulty construction. The insurance company steps in to investigate and starts the claims process. You begin repairs. You're still waiting for answers. And then—just as your claim remains open—you receive a letter that your homeowners policy is being canceled.

Unfortunately, this is a real scenario many Californians are facing. The combination of rising insurance costs, stricter underwriting, and market instability means more homeowners are being dropped mid-recovery. If this has happened to you, you're not alone. But there are a few things you need to understand and some steps you can take now.

Yes, It’s Legal—But That Doesn’t Mean It’s Right

Many homeowners assume that once a claim is open, their policy must stay active until the claim is resolved. In reality, that’s not how it works.

Insurance companies have the right to non-renew or cancel a policy for a variety of reasons, as long as they comply with state notice requirements. In California, that means providing at least 75 days' notice before the policy expiration date. They don’t have to wait until your claim is settled.

That said, a company can’t cancel you just because you filed a claim—but they can use the broader circumstances surrounding the claim (frequency, type, property condition, risk score, etc.) to justify non-renewal. And unfortunately, once a claim is still open, most insurers won't write a new policy until it's closed.

It creates a perfect storm: you can’t stay, but you also can’t go anywhere else.

Why This Is Happening More Often in 2025

This isn’t just bad luck—it’s a symptom of a larger issue in the California insurance market.

In recent months:

  • Multiple major carriers have paused writing new homeowners policies in California due to wildfire risk, inflation, and rebuilding costs.
  • Premiums have surged 20–30% across the state, even for clean accounts.
  • The FAIR Plan—California’s last-resort insurance option—is being used more than ever, even for homeowners who previously had no trouble securing coverage.

What we’re seeing is an industry that’s pulling back, fast. Insurers are more risk-averse than ever. If your home has an open claim or a recent loss, it's now considered part of that risk.

The Claims Process Shouldn’t Be Weaponized—But It Often Is

One of the most frustrating parts of this scenario is how long it takes for some claims to be resolved. Whether it’s water damage, fire, or storm-related destruction, delays can stretch into months—or even longer.

And while you're waiting, you're vulnerable:

  • Your insurer might delay decisions, but still drop your policy before it’s resolved.
  • You can’t shop for new insurance while a claim is open.
  • And the only option left may be the California FAIR Plan, which can cost double or triple what your previous policy did—and offer less coverage.

We believe strongly that the claims process should be transparent, timely, and fair. If your insurer is ignoring your emails, dodging your calls, or giving you vague responses, it may be time to escalate.

What You Can Do Right Now

If you’ve received a non-renewal letter while your claim is still open, don’t panic—but do act quickly. Here’s what to focus on:

Request a Formal Status Update on the Claim

Put your request in writing and send it by email and certified mail. Ask for a detailed explanation of where your claim stands and when a resolution can be expected.

California law requires insurers to respond to communications about claims within 15 days when a response is expected. If they fail to do this, it could be a violation of fair claims practices.

Ask for a Supervisor or Claims Manager

If your adjuster isn’t responding, escalate immediately. A supervisor may be more motivated to move the claim along—especially if you’re facing a policy deadline.

File a Complaint With the California Department of Insurance

If you're being ignored or delayed without cause, you can file a formal complaint. The Department can investigate and help apply pressure where needed.

Explore the FAIR Plan—But Don't Rush Into It

The California FAIR Plan is a last-resort fire insurance policy for high-risk or hard-to-insure properties. In many cases, it’s the only option available if no standard carriers will write you a policy due to an open claim.

But it’s expensive—often $6,000 to $9,000 per year—and it doesn’t include liability or theft protection by default. You may need to purchase a Difference in Conditions (DIC) policy to supplement it.

Before enrolling, review all terms and pricing and speak to an agent who understands how to bundle coverage effectively to reduce your risk and costs.

Thinking Long-Term: What to Do After the Claim Closes

Once your claim is resolved, you’ll have more options—but you’ll still face challenges. Most carriers will ask about:

  • The number of past claims
  • The value and type of claims
  • The condition of your home post-repair

Be prepared to show documentation of the repair work completed, improvements made, and any upgrades that reduce future risk (e.g., new plumbing, electrical work, or roofing materials).

We also recommend you:

  • Review your home insurance policy annually
  • Ask your agent about risk scoring and what carriers are flagging now
  • Consider a higher deductible for future protection against non-renewals due to frequency

Our Take as a Local Insurance Agency in Ontario, CA

We see this scenario more often than we’d like—especially since the 2023–2024 storms and increased underwriting restrictions across California.

Here’s what we believe:

  • Yes, your insurer can non-renew you during a claim. But they still owe you timely, professional communication.
  • Yes, the FAIR Plan can help—but it’s not ideal, and you shouldn’t be forced into it without exploring alternatives.
  • No, you’re not powerless. You can escalate. You can document. You can rebuild eligibility once the claim is closed.

We help clients who’ve been dropped, ignored, or priced out. We also work with homeowners who’ve been forced into the FAIR Plan and are now looking for better long-term options.

Our agency offers:

  • Homeowners Insurance (standard and high-risk)
  • Auto, Life, Business, and Medicare Coverage
  • Contractors' Insurance, Business Tools, and Workers' Comp

Need to reset your coverage or find out what’s possible after a claim? Get a Farmer's home insurance quote today.

If you’ve been dropped—or you’re dealing with a slow claims process and a non-renewal letter—call us now. The sooner we talk, the more options we can explore together.

This Is a Business Decision—So Make Yours Too

Insurers are treating open claims and non-renewals like a numbers game. You should treat your protection the same way. Be proactive. Be smart. And work with an agency that won’t leave you guessing when it matters most.

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