Can insurance companies cancel my policy or raise my rates if I have a big claim?

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Asked February 23, 2012

1 Answer


The key to this question will be your honesty in filling out the insurance application. As long as you have provided accurate and truthful information, your rates will be locked in, regardless of any claims you may file over time. This does not mean that your rates will never increase, but it does mean that you cannot be singled out for a rate increase because of filing claims against the policy.

Many factors can cause an increase in your insurance rates over time, including your residential location. But these increases, by law, must be applied to all policyholders equally. Inflation can cause insurance rates to rise, but such increases must be across the board for everyone who would be otherwise equal to you in health risks.

The purpose of insurance is to pay for claims you are forced to file. You cannot be penalized for making such claims, and the risk of insuring you does not increase after you file a claim. Doing so would undermine the whole purpose of the insurance industry, which is to provide you with a financial tool to overcome the hardships that life may throw at you.

However, if you were not honest in filling out your application, such as omitting portions of your medical history or denying preexisting conditions you may have, your insurance company can not only increase your rates, they can cancel your policy. For insurance companies, fraud is a major problem, and it is important that you provide them with the most accurate information possible so that your rates can be properly calculated.

Answered February 23, 2012 by Anonymous

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