Can I Change Insurance With an Open Claim?

It is possible to change insurance providers even when an existing claim is still being processed with your current insurer. While generally possible, the process involves specific considerations regarding both the ongoing claim and the terms of a new policy.

Your Right to Change Insurers

Policyholders have the right to switch insurance providers at any time, even if an open claim exists with their current company. Insurance policies are usually structured as term policies. You can cancel your existing policy before its renewal date.

When canceling a policy mid-term, there might be implications such as potential cancellation fees, though this is uncommon for insurance contracts. Conversely, you may be entitled to a pro-rata refund for any unused portion of your premium. Review your specific policy documents to understand the terms related to early cancellation and any associated financial adjustments. This ability to terminate your current insurance contract is separate from the ongoing management of an existing claim, which remains tied to the insurer that provided coverage at the time of the incident.

How Your Open Claim is Handled

An open claim remains the responsibility of the insurance company that provided coverage when the incident occurred. Your new insurance company will not take over the handling or financial responsibility for a claim that originated before your new policy began. This means the original insurer is obligated to continue processing, investigating, and paying out on the claim as if your policy were still active with them.

Communication regarding the open claim will continue with your former insurer. You will need to provide any requested information and cooperate with their adjusters until the claim is fully resolved. For instance, if the claim involves ongoing medical treatment or repairs, your old insurer will continue to manage those aspects.

Considerations for Your New Coverage

When seeking new insurance coverage with an open claim, you must truthfully disclose the existing claim to prospective insurers during the application process. Insurance companies have access to claims history databases, such as the Comprehensive Loss Underwriting Exchange (C.L.U.E.), which will show your past claims. Failing to disclose this material fact can lead to significant consequences, including the potential cancellation of your new policy.

An open claim, especially one resulting from a significant loss or an at-fault incident, can influence the premiums offered by new insurers. They may view a recent claim as an indicator of higher risk, potentially leading to increased rates. While some insurers might be hesitant to offer coverage to a new policyholder with an unresolved claim, it is still possible to find new coverage. It is important to ensure there is no lapse in coverage between your old and new policies to avoid being uninsured, as this can create significant financial risk. You should secure and confirm your new policy before canceling your old one.