You just got a notice from your home insurance company that says your policy is being canceled. Now what?
Take a deep breath and get ready to act quickly. You have a small window to get things back on track so you can keep your house protected and meet your mortgage requirements.
Let’s take a look at what to do if your homeowners insurance policy is canceled. You’ll learn the difference between a cancelation and a non-renewal and common homeowners insurance cancelation reasons, too.
Why Would an Insurance Company Cancel Your Home Insurance Policy?
A canceled policy means the insurance company terminates an existing policy before the term is through. In other words, the coverage will end before the original expiration date. If you’ve had the policy for at least two months, there’s usually only two reasons that would happen: you didn’t pay the premium or they suspected fraud.
But a policy could also be canceled or not renewed because:
- Too many claims have been filed.
- Bad credit.
- Aggressive pet breeds.
- A new trampoline or pool.
- The property is vacant.
- Criminal record.
- Coverage is no longer available in your area.
If you have too many claims, you may want to better protect your property to reduce the chance of loss. That might mean replacing old plumbing that keeps failing or installing a security system to prevent theft. At the end of the day, when you file fewer claims, your premiums will be lower and you’re less likely to face cancelation.
Things like credit score, pets, and trampolines depend on your company. Chances are you just need to find an insurance company willing to take these types of risks – they exist; you just need to find them.
If you aren’t living in your home, you may need landlord insurance or second home insurance to protect the property. Even if your policy isn’t canceled but it’s sitting vacant for most of the year or occupied by someone other than the owner, you could risk your claims being denied because you don’t have the right policy in place.
The Difference between Being Canceled vs. Non-Renewed
Both a canceled policy and a non-renewal result in the need to get insurance elsewhere. But there are a couple of important differences.
When a policy is canceled, the coverage will end before the original term expires. As we discussed, this rarely happens except in cases of fraud or nonpayment. Insurance isn’t free, after all.
Insurance fraud may be lying on the policy application in order to get coverage or get higher coverage for a home not valued as high. It can also include making fraudulent claims.
A non-renewal means the insurance company reviewed the policy with the intent to renew but found the home no longer meets its requirements. Every company has its own underwriting guidelines, so what’s uninsurable for one company isn’t necessarily so for another.
Insurance companies must give you ample notice in either case: up to 20 days for a cancelation and 45 days for non-renewal so you can get new insurance in place.
Just because one insurance company has given you notice of non-renewal or cancelation doesn’t mean your home is uninsurable. There are usually things you can do to improve your eligibility and there are always other companies that will happily protect your home.
What to Do If Your Homeowners Insurance Is Canceled
If you get a cancelation or non-renewal notice, call your current insurance company right away. There may be something that can be done to keep coverage in force. For example, if you missed a payment, you may simply need to pay your premium. If you’re no longer living in your home, you may be able to get a landlord policy instead.
Sometimes insurers allow you to remedy the problem before the cancelation date. For example, if your old roof is the reason for your nonrenewal, you might be eligible for coverage once it’s replaced.
If your insurance carrier doesn’t offer a solution, shop around for a new policy. Different companies take on different risks. For example, one company may have a restricted breeds list and not insure homes that have German shepherds. Another company may happily insure your home regardless of the canine company you keep.
Look for companies like Kin that specialize in insuring “risky” states like Florida and California. While other insurance carriers have stopped offering new policies in these states, we believe in serving homeowners who need our solution the most.
If you’ve shopped around and still can’t find takers, consider contacting your state’s FAIR plan. The Fair Access to Insurance Requirements (FAIR) is a state-run program that provides insurance for those who can’t get a policy from the private market. It’s a pretty common option for homeowners in California’s wildfire zones, for example.
If you’ve been canceled or non-renewed, give us a call and see if we can help you out.