A property insurance claim is a formal request made to an insurance company for coverage or compensation for a policy event or loss. This claim can come in several forms, such as theft, fire, or damage from natural disasters like earthquakes, floods, or excessive winds.

Filing a successful claim is as important as understanding all policy provisions. Successful claims ensure policyholders can recuperate their financial losses after sudden or unforeseen circumstances. If a claim is satisfied, it can help with home repairs, personal property replacement, or even living expenses if the property becomes uninhabitable. 

With decades of experience handling California insurance policies, we at Old Harbor know the common claim process pitfalls. So, to correctly answer the “In What Circumstance Would A Property Insurance Claim Be Rejected?” question, let’s cover the most likely rejection scenarios in California. 

In What Circumstance Would A Property Insurance Claim Be Rejected?

So, in what circumstance would a property insurance claim be rejected? The insurer will likely deny a claim if your situation falls under the exclusion or goes beyond limitations, if it doesn’t comply with the provisions, or if their assessment team determines there’s been illegal activity or negligence on the insuree’s side. 

But, to elaborate appropriately, let’s dig deeper and explore things in-depth.

Policy Exclusions and Limitations

Standard exclusions outlined in most property insurances include damage due to wear and tear, intentional damage, damage due to nuclear hazards, war, or government action, and damage from earth movement, such as earthquakes, which need a separate policy in California. Some policies also exclude certain natural disasters, like floods or landslides, if the property is in a region prone to these incidents.

Limitations, on the other hand, refer to the maximum sum an insurance company must pay in the event of a claim. It might apply to certain types of personal property, where the total amount for a claim can be capped. 

Understanding policy exclusions and limitations is vital to avoid claim rejections. It also allows you to take necessary precautions and measures to prevent any possible situations that may lead to a rejected claim. 

Non-Compliance With Policy Conditions

Non-compliance with policy conditions is another reason a property insurance claim may be rejected. Most insurance policies contain a set of obligations or duties for the policyholder. These policy conditions range from procedural requirements after a loss, such as prompt notification of the loss to the insurer, to maintenance provisions, like the need to maintain fire alarms in working order.

One common policy condition is to report any damage to the insurance company promptly. In California, laws require policyholders to file claims within a reasonable time — there isn’t a specific timeline, but the rule of thumb is as soon as possible. For example, if your property suffers fire damage, you should report it immediately to your insurer. Delays can lead to rejection because it becomes harder to establish what caused the event and its impact on the property.

Secondly, most insurance policies require the insured to take reasonable steps to mitigate further damage after a loss has occurred. This could involve putting a tarp over a leaky roof to prevent further water damage or securing a property after a burglary to avoid additional theft.

Breaking these conditions, such as failing to report a loss promptly or neglecting to mitigate further damage, are often grounds for denial of a claim. Other forms of non-compliance can lead to rejection as well. For instance, if a policyholder knowingly gives false information or hides information during the claims process, this can also serve as a basis for rejection.

Acts Of God Or Natural Disasters

Natural phenomena called “Acts of God” often result in significant property damage. Unfortunately, standard property insurance policies typically do not cover such damages. This exclusion often surprises many property owners and may result in claim rejection when such events occur.

Common Natural Disasters Not Covered Under Standard Property Insurance Policies

While each property insurance policy differs, certain natural disasters are commonly not covered in a standard policy:

  • Earthquakes: In California, due to its geographical location, the risk of earthquakes is high. However, a standard homeowners policy doesn’t cover earthquakes.
  • Floods: Damage from floods, including flash floods, storm surges, and overflows of bodies of water, is not generally covered in standard policies.
  • Landslides & Mudslides: Often, damage from landslides and mudslides is not covered under a standard policy, even though it’s a risk in many California areas, especially those with steep hills or previous wildfire damage.

It’s essential to read your insurance policy carefully to understand what types of natural disasters are covered and which are not.

Importance Of Insuring Additional Coverage

Since standard property insurance policies often exclude significant natural disasters, property owners in areas prone to these events should consider purchasing additional coverage. Such coverage can be obtained as a separate, standalone policy or an endorsement added to your existing homeowner’s policy.

In the Californian context, for example, homeowners can purchase a separate earthquake insurance policy. For flooding, individuals can typically buy protection through the National Flood Insurance Program.

It’s a good idea to talk with an insurance professional to understand what additional coverage might be necessary, given your property’s location. By ensuring all potential threats are covered, you can prevent future insurance claim rejection.

Illegal Activities

Another circumstance that can result in property insurance claim rejection is when the damage or loss is due to illegal activities conducted by the policyholder.

Insurance policies cover accidents, damages, or losses caused by unforeseen or uncontrollable circumstances—not due to the intention or negligence of the policyholder. If a loss or damage occurs because of illegal activities, insurance companies are likely to reject any resulting claims.

For example, if a house fire occurs resulting from a drug manufacturing operation, the ensuing claim would be denied due to the illegal nature of the activity. Similarly, if a burglary were to happen because the policyholder left their property open intentionally for a staged theft, this would also be an illegal act that would lead to a claim denial.

Policyholders must adhere to all local and national laws and regulations. Engaging in unlawful activities not only puts the property at risk but also makes any damage sustained as a result uninsurable.

Insurance policies don’t function as fallbacks for irresponsible or unlawful behavior but as a safeguard against unforeseen and uncontrollable circumstances that can lead to property damage or loss.

Understanding the legal aspects of property insurance claims can prevent unwarranted surprises when claims are rejected due to illegal activities. 

Policy Lapses And Non-Payment

A property insurance policy lapse is when the policyholder’s insurance coverage is considered inactive due to non-payment of premiums. Every policy outlines the conditions for policy lapses, including the specific grace period granted to policyholders for making premium payments past their due date. If the policyholder fails to pay within this grace period, the policy will lapse, and the insurance coverage becomes null and void.

Non-payment of premiums is one of the most common causes of policy lapses. If a policyholder fails to pay on time, the insurance company may choose to cancel the policy entirely or not renew it after the current term is over. Therefore, policyholders need to ensure timely payment of premiums to avoid lapses

When a property insurance policy lapses or if there has been non-payment, the insurance company is under no obligation to accept claims filed during this period. Irrespective of the cause or extent of property damage, the claim will be rejected if the policy is not in force at the time of loss or damage.

The reasoning behind this is simple – if the policyholder has not paid the premium, they essentially lose their coverage, making the insurance company not responsible for any damages that occur during the period without coverage.

In California’s case, if a claim is filed during a policy lapse due to non-payment, the insurance company is likely to reject it outright. Therefore, to avoid claim rejections, it’s necessary to maintain regular premium payments and to reinstate any lapsed policy as soon as possible. Doing so will ensure uninterrupted coverage and increase eligibility for claim acceptance.


To make an informed decision, any insuree must ask, “In What Circumstance Would A Property Insurance Claim Be Rejected?”. It’s of vital importance in any state, especially in California.

Key rejection reasons include non-compliance with policy conditions, negligence, pre-existing damage, losses from uncovered natural disasters, damage from illegal activities, and policy lapses due to unpaid premiums.

Adhering to policy terms, such as reporting damage promptly and preventing further damage, along with regular property maintenance, can help avoid rejections due to neglect. Accurate documentation of property conditions before insurance acquisition can address pre-existing damage issues. Considering additional coverage for natural disasters not included in standard policies, abiding by the law to prevent rejections from damages during illegal activities, and maintaining regular premium payments to avoid policy lapses are also strategic steps.

However, if it becomes challenging for you to navigate the real of property insurance, we at Old Harbor are always ready to provide a helping hand. Just visit our website, reach out, and we’ll handle everything!