Should cancelling an insurance policy after filing one claim be illegal?
Underwriters review insurance claims and make rather subjective decisions. I was recently cancelled by an insurance company for filing one homeowner's claim. They also considered a separate coverage inquiry as a claim.
If such cancellations were made illegal, the most likely result would be that the insurance companies would reject more claims than is the case currently. Insurance companies may honor claims they consider dubious, then cancel the policy.
This said, the cancellation practices you are referring to is a source of frequent complaints, and there is a lack of transparency in this area. If anything, rules addressing the issue should focus on requiring the insurance companies to provide fuller explanations, which would make it harder for them to use cancellations in an unreasonable manner.
I'm not sure that it should necessarily be illegal, but I've had it done to me once on an auto policy. I was rear-ended, it was deemed the fault of the guy that rear ended me, who was uninsured by the way, and they cancelled me directly following the issuing of my check.
In this particular case, it actually worked in my favor as I was able to reinsure at a better rate. One should evaluate their policies often anyway, and their options, as insurance companies often times need a strong reminder that we are customers, not simply 'the insured.'
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