High-risk homeowners insurance: What to do when you can’t get coverage

High-risk homeowners insurance isn’t an actual insurance product. The term simply describes a policy for a home that may be more difficult or expensive to insure. 

When you apply for insurance, the insurer considers several factors about the home and homeowner to determine the risk involved in insuring the property. Homes that are structurally weak or degrading, located in areas with extreme weather, or a liability due to features like a pool or trampoline may be classified as high-risk.

The amount of risk your home poses to the insurance company can affect your eligibility for coverage and your insurance cost (called your premium). High-risk homes tend to be more expensive to insure than other properties.

Learn what classifies as high-risk, which factors affect home insurance premiums, and how to get insurance if your home is too risky for standard coverage.

Why insurers consider homes high-risk

Insurance companies consider certain homes to be high-risk when there’s an increased likelihood of a claim occurring. Each time an insurance company pays a home insurance claim, it impacts their bottom line. So, insurers can refuse to cover high-risk homes or charge homeowners higher premiums to offset potential financial losses.

Every home insurance carrier classifies risk differently, so a home defined as high-risk by one insurer might not be by another. But in general, homes with these characteristics often fall into the high-risk category:

• Structural issues: Examples include a cracked foundation or deteriorating roof 

• Dated home systems: Examples include knob-and-tube wiring or a failing septic system

• Weather risks: Homes located in an area with extreme weather or natural disasters, like hurricanes, wildfires, and earthquakes

• Occupancy: Homes that aren't occupied full-time, like a vacation home or house under construction

• Attractive nuisances: Examples include pools, diving boards, playgrounds, and trampolines on the property 

Who needs high-risk home insurance?

You might need high-risk home insurance if your house doesn’t qualify for standard homeowners insurance because of its condition or characteristics. While some of these factors can be improved to reduce your home’s risk — such as replacing outdated systems — others, like your location, can’t be changed easily.

Here are some examples of who might need a high-risk home insurance policy:

• Your house has a pool or hot tub

• You live in an area prone to wildfires

• Your home has old systems

• Your home isn’t in good structural condition

• Your home is located in a high-crime neighborhood

• You’re insuring a home that isn’t your primary residence

• You’ve filed multiple home insurance claims in the past

What does high-risk home insurance cover?

High-risk home insurance isn’t a type of insurance policy. Coverage-wise, it’s the same as regular HO-3 home insurance. But there’s a catch—if your home is high-risk, it can limit the types of coverage you’re eligible for. 

These are the main things that a high-risk home insurance policy can cover:

• Dwelling coverage (Coverage A): Covers the physical structure of your home and attached structures (i.e., a garage or porch) against perils like fires, lightning, wind, hail, theft, vandalism, falling objects, and explosions. 

• Other structures coverage (Coverage B): Covers other structures on your property, like sheds or detached garages.

• Personal property coverage (Coverage C): Helps replace your personal belongings that get damaged or destroyed in a covered loss.

• Additional living expenses coverage (Coverage D): Helps reimburse living expenses, like a hotel and restaurant meals, if you have to temporarily relocate while your house is repaired after a covered loss. 

• Personal liability coverage (Coverage E): Covers your legal fees and court costs if you get sued for causing bodily injury or property damage to another person. 

• Medical payments coverage (Coverage F): Pays a small amount for a guest’s medical bills if they get injured on your property.

What does high-risk home insurance not cover?

Just like standard home insurance, high-risk homeowners insurance doesn’t cover everything. Some of the most common policy exclusions include:

• Damage from floods and earthquakes: Most home insurance policies exclude damage caused by a flood, earthquake, landslide, or sinkhole.

• Lack of maintenance: Damage that results from a lack of maintenance, like a slow roof leak that causes water damage in an attic, usually isn’t covered.

• Infestations: High-risk home insurance doesn’t cover structural or personal property damage from rodent or bug infestations.  

• Home-based businesses: If you run a business out of your house, standard home insurance policy won’t cover things like business inventory or lost income unless you add an endorsement.

• Valuable belongings: High-risk home insurance has limited coverage for valuables, like expensive jewelry, so you may not be fully protected unless you schedule coverage for valuable items.

Is high-risk home insurance more expensive?

High-risk home insurance is usually more expensive than standard home insurance. Insurance companies charge more because they face a greater risk of having to pay claims due to the home's increased likelihood of sustaining damage.

Factors that impact high-risk home insurance premiums

The cost of high-risk home insurance depends on many factors. Here are some of the things that can affect your premium:

• Location

• Age of the home

• Size of the home

• Type of home insurance policy

• Home features and characteristics

• Past claims history

• Coverage limits

• Deductibles

Are deductibles higher for high-risk homes?

In general, homeowners insurance deductibles aren’t higher for high-risk homes. When you purchase a home insurance policy, you’re able to choose your deductible — the amount of damage you agree to pay for out of pocket — for dwelling and personal property insurance. The higher your deductible is, the lower your premium will be (and vice versa).

But depending on which factors make your home high-risk, you could have to pay higher deductibles for certain damaging events, called perils. For example, if your home is considered high-risk because you live in an area that’s prone to hurricanes, you might pay a separate hurricane deductible if your home is damaged in a storm and you file a claim.

How to get insurance for high-risk homes

Getting high-risk home insurance can be more challenging than securing a policy for a lower-risk home. You might have additional underwriting requirements, like an in-depth inspection. When you’re ready to purchase a policy, here are the basic steps to follow:

1. Make home improvements: Before you start applying for high-risk home insurance, consider making home improvements to reduce your risk and improve the chances of approval. This might include repairing your roof, replacing outdated electrical or HVAC systems, fencing in a pool, or installing fire alarms.

2. Research companies that insure high-risk homes: Some insurance companies are more friendly to high-risk homeowners than others. Spend time researching insurers that sell coverage for risky homes (sometimes called non-standard home insurance). Learn what information you need to apply for a policy. 

3. Gather your documents: Having the right documentation can go a long way when getting high-risk home insurance. For example, if you have a copy of a recent home inspection or proof of home renovations or maintenance, those documents can help the insurance company decide if your home is insurable. 

4. Get quotes and compare policies: Once you’ve narrowed down your home insurance carrier options, get personalized quotes. Comparing policy details and quoted rates will help you find the best coverage at the most affordable price for your specific situation.

5. Bind your coverage: To finalize your policy, select the best option, choose your coverage start date, and make the necessary payment to bind the agreement. If you pay for home insurance through an escrow account, you may need to contact your mortgage lender to coordinate payment.

Alternatives if you can’t find a standard home insurance policy

Some properties are too risky for standard home insurance. But if you can’t find home insurance on the voluntary market, you still have options. Here are some alternative ways to get insurance on high-risk homes:

• Other types of home insurance: If your home doesn’t qualify for standard HO-3 home insurance, you might be eligible for an HO-8 policy, which covers historic and older homes that are high-risk. You might also consider a standalone catastrophe insurance policy if you want coverage for high-cost weather events, like floods and hurricanes.

• FAIR Plans: State Fair Access to Insurance Requirements (FAIR) Plans are last-resort options for people who can’t get standard home insurance on the private market. FAIR Plans are backed by state governments and only cover your dwelling and personal items against specific perils (risks) outlined in the policy.

• Excess and surplus (E&S) lines insurance: Some high-risk homeowners can obtain coverage from an E&S insurance company. These carriers aren’t licensed by the state and have more flexible underwriting requirements. The downside is that E&S insurance companies tend to charge higher premiums than private insurers, and coverage may be more limited.

Frequently asked questions

How can you reduce your home's risk for homeowners insurance?

There are many ways to reduce your home's risk. You can make home improvements, like replacing the roof and outdated systems, remove attractive nuisances, and install safety features, like a home security system or connected fire alarm system, for instance. 

Can I still get a standard home insurance policy if my home is high-risk?

Yes, you might still be able to get standard home insurance even if your house is high-risk. To  find out if your home is eligible for standard coverage, you can contact a home insurance company or apply for a policy. 

How can I lower premiums for high-risk homes?

You can lower your home insurance premium for a high-risk property by raising your deductible, taking advantage of discounts, bundling your premiums, and making your home more disaster-resistant. You can also shop around for new quotes to see if you can get a cheaper premium from another insurer.