What to do if your homeowners insurance is cancelled
Nearly 63% of Americans own their home, but for some getting homeowners insurance can be arduous. Depending on where you live or how many claims you file, an insurer may not want to take on the risk of insuring you.
So what happens if your home insurance is cancelled? Here's what you need to know.
Why Your Homeowners Insurance May be Cancelled
Home insurance cancelled after an inspection: If you have an existing policy, it may be cancelled once it's up for a renewal if the insurance company's underwriter inspects the property and finds an unacceptable risk. Potential fire hazards, pipes, kitchens and other structures in disrepair may cause a cancellation. The only way an insurer would consider reinstating your policy is if you address these issues and complete repairs.
Roof damage/age of roof: If you have an older home with an older roof, you could be at risk for a home insurance cancellation. Some insurance companies will require an inspection if your roof is at least 20 years old and others won't even insure your home if the roof is that age.
A roof's typical life expectancy is around 30 years, but the older the roof the more risk for your insurer. If your roof fails an inspection when you're up for a renewal, your insurer can cancel your insurance and require a roof replacement to reinstate your policy.
Multiple claims: Your home insurance can be cancelled after filing too many claims. Filing multiple claims may make your insurer think there are too many risks in your home, and this could result in a higher premium or cancellation.
Living in a high-risk area: While an insurance company could drop a customer due to too many claims on an individual basis, they could also elect to not insure any properties in an area prone to claims via natural disasters, such as coastal regions. In Florida this occurs frequently for areas prone to flooding and hurricanes.
Pets: Homeowners insurance covers your property and the contents within it, and includes Personal Liability coverage. In Florida animal liability is not covered under the personal liability limits, and is excluded from a homeowner policy. Fortunate for some, an animal liability endorsement can be added to a policy for as little as $25/year for $50,000 in coverage. However insurance companies maintain an exclusion list for pets they will not insure. Certain breeds of dogs are on this list, and this will also include exotic pets.
If your exotic pet or blacklisted breed bites someone or damages your neighbor's property and you must file a claim, your insurance company may cancel your policy if they weren't informed of the pet when they issued your coverage. Full disclosure is important -- hiding details from your insurance company could give them a justifiable reason to cancel your coverage.
Not paying your premiums: Not paying your premiums can put you at risk for a home insurance cancellation if you also present a huge liability to your insurance company in other ways. For example, if your roof is in need of replacement, if you've filed multiple claims -- and in addition to these factors -- you've made late payments consistently; your insurer has a legitimate reason to cancel your policy.
Insurance providers usually offer homeowners some flexibility when it comes to payment due dates, including a 30-day grace period to allow you to catch up on payments (though this varies by state). If you pay your entire premium during this grace period, you can maintain your coverage and your insurer will likely pay any claims made during that period, if they meet the terms of your policy.
How to Get Home Insurance if You've Been Cancelled
Insurance companies are required to notify homeowners in advance of when they plan to cancel a policy. If a cancellation takes place right after a policy is put in place, an insurer typically can give a homeowner 45 days notice of cancellation. Depending on why your insurance was cancelled, you'll have several options to either reinstate your policy or find a new insurer.
If your insurance coverage was cancelled because an inspection revealed an unacceptable risk on your property, repairing the issue, such as a damaged roof, could result in your policy being reinstated. If your insurer still refuses to insure you, you can dispute the cancellation and request remediation or file a complaint with the state department that oversees the local insurance industry.
However, if your home insurance was cancelled because you filed too many claims or lives in a high-risk area, it's unlikely that your policy will be reinstated and you may have difficulty finding another provider. So what do you do if you've already filed a claim and your insurer has dropped you? Your insurer may still cover it if the incident happened during the policy period. However, if your policy was voided because of fraud or misrepresentation, you'll likely have to cover the damage out-of-pocket.
If you must find new insurance, there are companies that specialize in helping high-risk homeowners. As an independent insurance agency, we have access to many insurance carriers that specialize in helping high-risk homeowners. Coverage can usually be found that is affordable and that meet the requirement of the homeowner’s mortgage company.
Contact us for a quote if your insurance has been cancelled for any reasons.