Can our homeowner's insurance cancel our policy after we attempt to file a claim?

Question

My husband and I suspected we had mole and asked that an analysis be conducted by the insurance company. The analysis was done, but we thought it would include air quality testing, but it didn't. We received the findings and were told that the mole would be caused by an increase in rain within the home and were denied our claim. We decided to pay to have an air quality test completed, and there is, in fact, a mole in our home. We informed the insurance company of the findings of our independent testing and received a letter that our policy is being canceled because we made structural changes to our home that make it uninsurable. We have not changed one thing to our home. It seems that we are being treated unfairly and more concerning is that we are living in a home with mole! Any guidance would be appreciated.

Delaram Keshvarian · Answer

Thank you for asking the question! 
 
Your insurance policy governs your and your insurance performance. Check there is the provision in your policy that states "structural changes" to property makes the agreement viable.  
 
Even if such a language exists, you should evaluate:  
1. What is the definition of "structural changes" under the agreement? If there is not any such definition, it is against the insurance. (An attorney can help you a lot in interpreting the agreement).  
 
2. Have you done any structural damages that matches the agreement definition (e.g., air testing for mole!!!!)? 
 
Any time you submit a claim to insurance, insurance is obliged to evaluate your claim with good faith. If there is any type of bad faith in declining your request there are 1. Breach of contact; and 2. Tort cause of action of bad faith.  
 
When there is bad faith in declining your claim (which happens a lot by insurance companies), punitive damages (multiple times bigger than your actual damages), in addition to actual damages, and attorney fees will be awarded to the insured. 
 
You can talk to an insurance Plaintiff-side attorney to see if insurance is acting unreasonably or with bad faith. These attorneys usually get contingency fees, which means they do not charge you unless they win or settle the case. 
 
This is merely discussion of CA general laws and not a legal advice. For a comprehensive advise, more specific facts and investigation are needed. I recommend you consult with an attorney in more detail.  
Please let me know if you need further assistance.  
Wish you luck.

James L. Arrasmith · Answer

I understand your concern and frustration with this situation. It seems that there may be a few issues at play here: 
 
1. In California, an insurance company can generally cancel a homeowner's policy for various reasons, including if they determine that the risk of insuring the property has significantly changed due to factors like the condition of the home. However, they typically need to provide adequate notice (usually 30-45 days) and a clear explanation for the cancellation. 
 
2. It's concerning that the insurance company is claiming you made structural changes when you state that you haven't. If this is inaccurate, you should gather evidence (e.g., photos, records) showing that no such changes were made. 
 
3. The presence of mold in your home is a serious health concern that needs to be addressed promptly.  
 
Here are some steps you can consider taking: 
 
1. Contact the California Department of Insurance (CDI) and file a complaint. The CDI can investigate the situation and determine if the insurance company acted improperly in canceling your policy. 
 
2. Consider hiring a public adjuster or attorney who specializes in insurance claims. They can help you navigate the claims process and potentially challenge the cancellation of your policy. 
 
3. Address the mold issue immediately to protect your health. Consider hiring a professional mold remediation company. Keep all records and receipts related to the remediation, as these costs may be recoverable. 
 
4. If your policy is indeed canceled, you'll need to promptly secure coverage with another insurer to avoid a lapse in coverage. Be fully transparent about the mold issue and provide the remediation documentation. 
 
Remember, your health and safety should be the top priority. While dealing with the insurance issue, don't delay in addressing the mold problem. If you believe the insurance company has acted in bad faith, you have options, including filing a complaint and seeking legal counsel.

Q: Can our homeowner's insurance cancel our policy after we attempt to file a claim?