In what circumstance might an insurer increase the premium or non-renew a policy?

An insurer may choose to increase the premium or non-renew a policy when misrepresentation on the application is discovered. Accurate information on an insurance application is crucial for an insurer to assess risk and determine premiums. If an applicant provides false information, whether intentionally or not, it can lead to the insurer covering a risk that is greater than what was originally presented. This change in risk profile may cause the insurer to reassess the terms of coverage, potentially resulting in a premium increase or a decision not to renew the policy. This action protects the insurer from losses that arise from covering risks based on incomplete or inaccurate data.

In other circumstances, such as when claims are denied, this typically does not directly lead to a premium increase or non-renewal since it addresses the insurer's obligation to cover legitimate claims. Filing multiple claims might suggest a higher risk that could lead to increased premiums, but it is the misrepresentation that fundamentally violates the trust upon which the insurer baselines its pricing and coverage decisions. Similarly, the nearing expiration of a policy alone is not a sufficient reason for increasing premiums or non-renewing; it is the overall assessment of the insured's risk profile that drives such decisions.