There must be a legitimate business reason for denying coverage. The business practices of insurance companies are regulated by the states, so the laws governing them can vary widely between states. Generally, though, if an insurance company denies someone coverage of their property interest, that denial must be based on reasons of risk to the insured.
An insurance company cannot deny a person coverage of their property interests for reasons of the person's race, color, sex, religion, national origin and ancestry. Many states also do not allow insurance companies to base their property coverage decisions on categories such as a person's martial status, age, job, primary language, sexual orientation, physical or mental impairment, or location of the person's home.
Most states require insurance companies to explain to the applicant the reasons she was denied for property insurance.
Can an Insurance Company Charge Whatever They Want?
No. What you can be charged by an insurance company for property coverage is based on a series of factors the company has in determining the cost of coverage for each person. These factors are not generated at random, but rather must be approved by a state regulatory agency, usually your state's "Department of Insurance." While the laws for each state vary, usually the law requires these factors be fair and nondiscriminatory. In order to see what exactly the law is in your state, check with your local Department of Insurance.
Can My Insurance Company Cancel Coverage for Any Reason?
Generally the answer is no, though any limitations the insurance company has on terminating coverage depends on when they decide to terminate coverage. Insurance coverage of a property interest generally lasts for a certain term. During that term the insurance company cannot cancel coverage for any reason except those stated in your policy, and as long as that reason would not violate state law.
If the term of your coverage has expired, your insurance company may decide not to renew your coverage for any reason as long as it does not violate state law. However, state law generally requires the insurance company to give you around a month's notice prior to the termination date of coverage if they decide not to renew your policy.
Seeking Legal Help
If you feel an insurance company has discriminated against you by means of their coverage policies, the first thing you can do is file a complaint with your state's Department of Insurance. Next, if you feel any kind of financial damage has been done to you as a result of this discrimination, you may want to contact an experienced bankruptcy attorney. Your lawyer will be able to advise you of your rights and guide you on the proper course of action for collecting damages due to you as a result of the discrimination.