What to Do If Your Homeowners Insurance Policy is Cancelled
Homeowners insurance. It’s the peace of mind that you’ll be financially protected if your home is ever damaged or destroyed. Still, home insurance—like all insurance coverage—is based on risk. That’s why a provider may cancel your policy if it finds that you or your property are too risky. But when you understand what causes an insurer to cancel coverage, you can take steps to prevent it from happening to you.
Want to feel more confident about managing your homeowners insurance and protecting your home? Here’s what you need to know to prevent a lapse in home insurance coverage—and how to get another policy if yours has already been canceled.
Reasons Why Your Homeowners Insurance Could Get Canceled
There are a number of reasons why your insurance company may consider you high risk and choose to cancel your policy, including:
- A bad inspection: One of the most common reasons that insurance companies cancel home insurance policies is related to inspections. Insurance companies generally do exterior inspections of homes when new policies are written, and they also typically conduct them when a policy is up for renewal. If your existing policy is up for renewal and the insurance company’s underwriter finds an unacceptable risk, it may be canceled. These high risks can include things like roof issues, potential fire hazards, and structural issues to your home. The only way an insurer would consider reinstating your policy would be if you were to address the necessary issues and repairs.
- Roof issues: The average lifespan of a roof is about 30 years. Still, the older your roof, the more it creates a risk for your insurance company. In fact, many providers require an inspection if your roof is at least 20 years old, and some won’t even insure your home if the roof is that age. If your roof fails an inspection come renewal time, your insurer may cancel your coverage and require a roof replacement before they’ll reinstate your policy.
- Multiple claims: Careful, because there’s a downside to filing too many insurance claims. Your insurer may think that there are too many risks in your home, resulting in a higher monthly premium or even cancellation of your coverage. It could even affect your car insurance as well, if you bundle your policies.
- Living in a high-risk area: It turns out that where your home is located matters, too. If you live in an area that’s prone to hurricanes, flooding, and tornadoes—such as coastal regions—a provider may consider your home too high of a risk to insure.
- Pets: It’s not just the structure of your home that insurance covers, but the contents within it—which can include the type of pets you own. Many states keep an exclusion list for high-risk pets they won’t insure. This can include certain dog breeds, as well as exotic pets such as a boa constrictor. It’s important to be transparent with your insurer about the pets you own. Otherwise, if you go to file a claim, your provider may cancel your policy if they weren’t informed of the pet when they issued your coverage.
- Not paying your premiums: It should come as no surprise that failing to pay your monthly premiums can put you at risk for canceled coverage. However, insurance providers typically offer some flexibility with payment due dates, such as a 30-day grace period to allow you to catch up on payments—although this can vary by state. If you pay your entire premium during the grace period, you’ll be able to maintain your coverage without interruption. However, if you’re late past the grace period and pose any of the other risks—such as needing a roof replacement or filing too many claims—you may face cancellation.
What Happens if they Cancel Your Home Insurance Policy
There are a few things that may happen if your homeowners insurance lapses.
First, your insurance rate could increase. For example, if your provider drops your policy because you were behind on your monthly payments, you will likely face a higher rate with another insurance company. That’s because a provider may see you as financially unstable, which would make you a higher risk for them to insure. In fact, it may be challenging to get a policy with a new insurance carrier because they may see the lapse in your insurance as too high of a risk and refuse to provide coverage.
Another possibility is that your mortgage company could purchase lender-placed insurance on your home. Also known as force-placed insurance, this type of coverage is a last resort option. It’s an insurance policy placed by your bank or mortgage servicer on your home in order to protect their own financial interests. The problem with lender-placed insurance is that it protects the mortgage company but not you, the homeowner. The cost is significantly higher than a standard policy, and it doesn’t cover additional living expenses if you have to leave your home for any reason that would otherwise be covered by your policy.
How to Get Homeowners Insurance After Your Coverage Is Canceled
If your insurance company decides to cancel your coverage, they’re legally required to give you advance notice. Typically, they’ll give 45 days’ notice, which means that your policy will remain in place until 45 days after the notice is sent. However, the time frame varies from state to state.
Depending on the reason for your cancellation, you’ll have a few options to either reinstate your policy or find a new insurance provider. For example, if it was due to a failed inspection you might be able to have your policy reinstated after making the necessary changes to your home, like repairing or replacing a deteriorated roof.
If you are not able to convince your insurance company to keep your policy, it may be harder to find another willing insurer, especially if you filed too many insurance claims or if you live in a high-risk area. If you are having trouble finding affordable home insurance after a cancellation, you can dispute the cancellation and request remediation. You can also file a complaint with your state’s department of insurance or a local insurance agent. They can provide a list of carriers who are tasked with providing coverage for high-risk homeowners in your area.
Protect Your Home With Comprehensive Affordable Insurance
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