How to Handle Insurance Nonrenewals and Rate Shocks

Published Date: 07/09/2024

You’ve paid your premiums on time for decades, never filed a claim, and suddenly your insurance company drops you. Or after one minor fender-bender in 40 years, your rate doubles overnight.



If this sounds familiar, you’re not alone. Californians across the state are experiencing what many now call an insurance crisis — where loyal customers are being penalized despite spotless records.

In this episode of Insurance Hour, host and insurance expert Karl Susman addressed listener questions about nonrenewals, skyrocketing premiums, and what consumers can realistically do when the system feels unfair. His guidance focused on action, rights, and practical next steps in today’s volatile insurance market.

Here’s what you need to know if your insurer drops you — or suddenly decides your risk has changed overnight.

What It Really Means When Your Insurance Company Drops You

One listener asked:

“My homeowner’s insurance company dropped me after never filing a claim. How can I fight it?”

Susman started with a difficult truth: if your carrier is pulling out of your entire area or the entire state, there’s very little you can do to contest that decision.

Many insurers today are making broad underwriting moves — exiting entire ZIP codes, counties, or fire-prone regions based on wildfire exposure, reinsurance costs, and overall profitability.

“If the company isn’t writing in your ZIP code anymore, you can’t really appeal it,” Susman explained. “It’s not about you — it’s about the portfolio.”

However, not every nonrenewal is automatic or irreversible. Some are tied to correctable property conditions.

How to Understand Why You Were Nonrenewed

Insurance companies are legally required to provide a reason for nonrenewal. Common reasons include:

• Roof age or visible roof damage
• Lack of defensible space or brush clearance
• Structural concerns found through inspection or satellite imagery
• Deferred maintenance or unresolved repairs

If your nonrenewal is based on one of these issues, you may be able to fight it.

“If they say your roof has damage or there’s debris around your home — those are things you can fix,” Susman said. “Call immediately and tell them you’re willing to make the repairs. Ask what proof they need.”

Why Documentation and Communication Matter

If you are fixing a cited issue, documentation is critical. Susman advised homeowners to:

• Take photos before, during, and after repairs
• Save all receipts and contractor invoices
• Send written updates to your agent or carrier

Insurers often prefer to keep customers who reduce risk rather than cancel them.

“In my experience, a new roof or cleared brush makes the home safer for everyone,” Susman said. “That’s good for you and good for the insurance company.”

If repairs are completed quickly enough, your agent may be able to submit an appeal or reinstatement request before the nonrenewal becomes final.

When a Nonrenewal Is Truly Out of Your Control

Sometimes, even perfect documentation won’t reverse the decision.

If the carrier has exited your region entirely or your ZIP code has become unprofitable due to wildfire exposure or reinsurance costs, there is nothing to appeal.

“If it’s a carrier-wide decision, they’re not dropping you — they’re dropping everyone,” Susman said.

In those cases, your next options typically include:

• Surplus lines or specialty carriers
• The California FAIR Plan
• Companion Difference in Conditions (DIC) policies for broader coverage

While the FAIR Plan is more limited and often more expensive, it prevents coverage gaps while you search for long-term solutions.

Why You Can Be Dropped Even Without Ever Filing a Claim

Many homeowners assume long-term loyalty protects them. Unfortunately, insurance does not work that way.

“Even if you’ve never filed a claim, your property can still become a higher risk over time,” Susman explained. “That’s why policies are renewed yearly — both sides get to reassess.”

At each renewal, insurers reevaluate risk using current wildfire maps, roof analytics, and updated construction costs. Insurance is a one-year contract, not a lifetime guarantee.

What to Do Immediately After a Nonrenewal Notice

If you receive a nonrenewal notice, time is critical.

• Act immediately. Most notices provide only 45–60 days of warning.
• Contact your broker right away to explore alternatives.
• Apply early for FAIR Plan or surplus lines coverage if needed.
• Avoid coverage gaps at all costs — even a one-day lapse can drive future premiums higher.

Early action greatly increases your chance of finding better options before your policy expires.

Can One Accident Really Double Your Auto Insurance Rate?

Another listener asked:

“I had one accident after driving for over 40 years, and my rate doubled. Is this legal?”

Susman’s answer was direct:

“Yes, it’s legal — and here’s why.”

Insurers must file their rating formulas with the Department of Insurance. Those formulas specify how accidents affect premiums. If the calculation follows the approved model, the increase is legal — even if it feels extreme.

How Accident Surcharges Actually Work

If you’ve driven accident-free for decades, your premium reflects deep long-term discounts. When an at-fault accident occurs, those discounts often disappear at once.

“You didn’t just get a surcharge — you lost your clean-record discount,” Susman said. “That’s why the jump feels so dramatic.”

Most accident surcharges stay on your record for three to five years. During that window, your rate reflects your updated risk classification.

If the accident was not your fault, make sure your insurer classified it correctly. Misclassification happens more often than people realize.

Why Accident Rules Vary by State

Each state regulates auto insurance differently. Some limit how much a carrier can surcharge for a first accident. Others allow broader flexibility.

In California, insurers must use Department-approved rating factors. They cannot arbitrarily double your rate — but if the math supports the increase under approved filings, it is still legal.

How to Reduce Your Auto Premium After an Accident

If your premium jumps after one accident, you still have options:

• Complete a defensive driving or traffic school program
• Review your claim to confirm fault was assigned correctly
• Ask about accident forgiveness programs
• Shop rates with other carriers
• Increase your deductible to offset part of the increase

Different insurers weigh accidents differently, so shopping can sometimes produce meaningful savings.

Why Insurance Increases Feel So Unfair

Much of today’s frustration comes from the way insurance spreads risk.

“Insurance is pooling,” Susman explained. “Everyone pays into the same pool. When wildfires, lawsuits, and inflation drive losses higher, even safe customers feel the increases.”

Higher global losses mean higher premiums for everyone — even customers who never file claims.

It’s not personal. It’s systemic.

The Bigger Picture of California’s Insurance Crisis

These listener experiences reflect what’s happening statewide. Insurers are facing:

• Record wildfire losses
• Soaring construction and labor costs
• High reinsurance prices
• Regulatory delays in rate approvals

In response, many carriers are reducing exposure through nonrenewals, freezes on new policies, and sharp post-loss rate increases.

Reforms such as allowing catastrophe modeling and faster rate reviews are underway — but stabilization will take time.

Final Thoughts on Staying Protected in a Shifting Market

The most important takeaway from Susman’s advice is simple: proactivity beats panic.

If you receive a nonrenewal notice, act immediately and document everything.

If your auto rate spikes after one accident, understand the reason and explore alternatives.

Above all, never allow a lapse in coverage.

“Insurance companies aren’t perfect,” Susman concluded. “But most want to keep good customers. Stay informed, stay calm, and stay insured.”

In today’s unpredictable market, steady coverage may be the most valuable protection you have.