Unanswered Questions: Listener Q&A Special on Insurance Hour
Published Date: 07/09/2024
When Your Insurer Drops You—and Your Premium Doubles After One Accident
Navigating Insurance Nonrenewals and Rate Shocks
You’ve paid your premiums on time for decades, never filed a claim, and suddenly—your insurance company drops you. Or maybe, 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 are calling an insurance crisis—where loyal customers are being penalized despite spotless records.
In this episode of Insurance Hour, host and insurance expert Karl Susman tackled listener questions about nonrenewals, skyrocketing premiums, and what consumers can actually do when the system feels unfair. His answers cut through frustration and focused on action — helping homeowners and drivers understand their rights and responsibilities in today’s volatile market.
Here’s what you need to know if your insurer drops you—or suddenly decides your risk has changed overnight.
When Your Insurance Company Drops You
One listener wrote in:
“My homeowner’s insurance company dropped me after never filing a claim. How can I fight it?”
It’s a question thousands of Californians are asking right now, as major insurers reduce their footprint in the state or pull out altogether.
Susman began with a hard truth:
“If your carrier is pulling out of your entire area—or even the entire state—there’s not much you can do to fight that.”
That’s because many companies aren’t targeting individual homeowners. They’re making broad underwriting decisions—nonrenewing entire zip codes, counties, or regions based on wildfire exposure, construction costs, or 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 all nonrenewals are created equal. If your insurer is canceling your policy for specific, correctable issues, you may have a fighting chance.
Step 1: Understand Why You Were Dropped
Insurance companies are legally required to provide a reason for nonrenewal. Common causes include:
- Roof age or condition
- Lack of defensible space or brush clearance in wildfire zones
- Structural concerns found via satellite imagery or inspection
- Poor property maintenance or unresolved repairs
If you receive a nonrenewal notice, read it carefully.
“If they say your roof has damage or debris, or that your home needs repairs—those are things you can fix,” Susman said. “Don’t wait. Contact your insurance company or broker immediately and say, ‘I’m willing to do the repairs—what do you need from me?’”
Step 2: Document and Communicate
If you’re addressing a maintenance or safety issue, document every step:
- Take photos before, during, and after repairs.
- Keep receipts and contractor invoices.
- Send email updates to your agent or carrier showing progress.
Susman emphasized that insurers often appreciate proactive policyholders:
“In my experience, insurance companies would much rather keep a customer who fixes the issue than lose them. A new roof makes your property less risky—it’s good for you and for them.”
Once you’ve made improvements, ask your insurer to reinspect or reconsider your policy. If they’ve already issued a nonrenewal, your agent may be able to submit an appeal or reinstatement request before the effective date.
Step 3: Know When It’s Out of Your Hands
Sometimes, though, no amount of repair or goodwill will reverse a nonrenewal.
For instance, if your insurer has decided to withdraw from your entire region—or if reinsurance costs make your zip code unprofitable—they simply can’t keep writing policies there.
“If it’s a carrier-wide decision, there’s really nothing to fight,” Susman said. “They’re not dropping you—they’re dropping everyone.”
When that happens, you’ll need to find alternative coverage, often through:
- Surplus lines carriers (unregulated specialty insurers)
- The California FAIR Plan, the state’s insurer of last resort
- Or brokers with access to niche or regional markets
It’s not ideal—FAIR Plan coverage can be expensive and limited—but it ensures continuous protection while the broader market stabilizes.
Why You Might Be Dropped Even Without a Claim
Many homeowners assume loyalty protects them from nonrenewal. Unfortunately, that’s not always true.
“Even if you’ve never filed a claim, your property can still become a higher risk over time,” Susman said. “That’s why policies renew annually—to give both you and the insurer a chance to reevaluate.”
Each renewal period allows carriers to reunderwrite your policy using the latest risk data—such as wildfire mapping, roof analytics, or construction cost inflation.
This system works both ways: you can shop for better rates, and they can assess whether your property still fits their appetite.
In short: insurance is a one-year contract, not a lifetime guarantee.
What to Do If You’re Nonrenewed
- Act immediately. Don’t ignore the letter—nonrenewal notices typically give 45–60 days’ warning.
- Contact your broker. They may be able to negotiate or find an alternative carrier before the lapse date.
- Explore FAIR Plan and companion policies. FAIR Plan covers fire only, but you can pair it with a “Difference in Conditions” (DIC) policy for broader protection.
- Avoid gaps in coverage. Even a one-day lapse can complicate future approvals and raise premiums.
When One Accident Doubles Your Premium
Another listener wrote:
“I had one accident after driving for over 40 years, and my rate doubled. Is this legal?”
Susman didn’t sugarcoat his answer:
“Yes, it’s legal—and here’s why.”
Auto insurance pricing is governed by state regulations, and each insurer must file its rating formulas with the Department of Insurance. Those formulas include how much they can surcharge for accidents, tickets, or other driving events.
How Accident Surcharges Work
Even one at-fault accident can dramatically affect your rate—especially if your record has been spotless for decades.
“If you’ve had 40 years of clean driving, your rate has been benefiting from all those years of good behavior,” Susman explained. “When you have a loss, that discount disappears—and that’s why it feels like a huge jump.”
In California and most states, surcharges for accidents typically stay on your record for three to five years. During that time, your premium reflects your updated risk profile.
If the accident wasn’t your fault—or was minor—make sure the insurer has it properly classified. Errors can sometimes cause unnecessary rate hikes.
Different States, Different Rules
Every state regulates auto insurance differently. Some limit how much insurers can penalize drivers for a first accident; others give carriers more discretion.
“I’m not sure what state you’re in,” Susman said to the listener. “But each has its own rules for how insurers are allowed to rate for accidents and tickets.”
In California, insurers must use verified, Department-approved rating factors—meaning they can’t arbitrarily double your premium. But if the math supports the increase under their approved formula, it’s legal.
What You Can Do to Lower Your Rates
If your premium skyrockets after an accident, you have options:
- Complete an approved defensive driving course.
Many carriers offer discounts or point reductions for completion. - Review your policy for accuracy.
Ensure your accident is correctly classified (not-at-fault vs. at-fault). - Ask about accident forgiveness.
Some insurers offer programs that waive the first surcharge if you’ve been claim-free for a certain period. - Shop around.
Each company’s risk model is different. One might penalize a single loss heavily, while another might not. - Increase your deductible.
Raising your deductible can offset some of the rate increase—just make sure it’s still affordable in case of another loss.
Why Rates Feel So Unfair
The frustration many consumers feel—being punished for a single mistake or being dropped without warning—comes down to how insurance spreads risk.
“Insurance is about pooling,” Susman said. “Everyone pays into the same pot. When losses increase across the board—wildfires, lawsuits, inflation—everyone’s rates go up, even the safest customers.”
That’s why even good drivers and responsible homeowners are seeing higher premiums and reduced availability.
In other words, it’s not personal—it’s systemic.
The Bigger Picture: California’s Insurance Crossroads
Both of these listener stories reflect a broader truth: California’s insurance system is under historic strain.
Carriers are facing record wildfire losses, rising construction costs, and strict regulatory rules that prevent them from adjusting rates quickly. Many have responded by limiting exposure—nonrenewing policies, freezing new business, or raising premiums sharply after claims.
“It’s a tough environment for everyone,” Susman said. “Carriers, brokers, and customers are all trying to adapt.”
While regulatory reforms are underway—such as allowing catastrophe models and faster rate filings—it will take time for the market to stabilize.
Final Thoughts: Staying Protected in a Shifting Market
If there’s one takeaway from Susman’s advice, it’s this: proactivity beats panic.
- If you get a nonrenewal notice—act immediately, communicate clearly, and document everything.
- If your rates spike after one accident—understand why, explore alternatives, and give it time.
- Above all, don’t let frustration lead to coverage gaps.
“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 world, that may be the best coverage you can have.
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