An insurance company can cancel your homeowners insurance policy for a variety of different reasons. In fact, it is quite common for companies to cancel or refuse to renew policies and it often leaves homeowners shopping around for coverage that is necessary to carry.
Having homeowners insurance is not a negotiable for many people (especially because having homeowner’s insurance is a requirement of banks or lenders, therefore it is important to understand why it can be canceled or up for non-renewal
Cancellation vs Nonrenewal
Homeowners often use the word “cancellation” when they talk about losing their home insurance policy unexpectedly, but there’s a difference between cancellation and non-renewal.
Cancellation of a policy happens before the policy’s term has been completed. Cancellation can be sudden, and how much notice you receive depends on the regulations in your state. Your insurer can cancel your policy for any reason during the first 60 days of the policy; the most common reason for cancellation during this time is non-payment of premium. After you’ve had the policy for 60 days, your insurer can only cancel your policy for specific serious reasons such as non-payment, or fraud or misrepresentation in the information you gave them when you bought the policy.
Non-renewal of a policy happens at the end of the policy’s term. When the end of the term is approaching, your insurance company will notify you that they are either considering non-renewal unless you comply with certain conditions, or that they have decided not to renew your policy. With non-renewal, you have time to comply with any conditions your insurance company has given you, or to shop around for another policy.
Here are 9 things that can trigger cancellation or non-renewal of your homeowners insurance:
This reason is increasing in frequency in Florida. Companies make a business decision to reduce exposure in certain areas to meet new guidelines and will non-renew a certain number of policies. There is nothing a homeowner can do to avoid this type of cancellation, but they will be notified well in advance and will have time to search out other options.
If you’ve made a large claim compared to the value of your home, especially if you caused the damage yourself, your insurance company may decide that you are too big of a risk and decline to renew your policy.
Too Many Claims
Just like with a large claim, making too many claims during your policy’s term can send a red flag to your insurance company. While the occasional claim is to be expected, several claims within the same policy term can lead your insurer to decide that you’re too much of a risk.
Poor Payment History
If you are frequently late with premium payments, or if your payments are very late, your insurance company can decide not to renew your policy or can even cancel your policy before the term is finished.
Some Unexpected Risks
Most homeowners aren’t aware that more and more insurance companies are now doing curbside “spot-checks” to look for things that may pose a financial risk for them. You may not even know your home has been spot-checked until you get a letter from the insurance company telling you that you need to make changes or face non-renewal of your policy.
Here are some of the risks that have caused homeowners to receive these letters, seemingly out of the blue. Some of these may surprise you:
- Condition of the roof
- Swimming pool
- Debris and cleanliness of the roof
- New dog of an unapproved type (e.g. large or “dangerous” breed; check your policy before bringing home a new dog)
- Not Passing an Inspection
Some insurance companies will request a short inspection before they renew your policy. Common things that lead to non-renewal after an inspection are the items in the list above, as well as:
- Not meeting fire codes (e.g. dangerous conditions in the kitchen)
- Bad pipes
- Criminal Charges that Indicate Risk
If you ever face criminal charges, your insurance company will find out about it. If the charges carry with them anything that hints that you may be an insurance risk, such as a citation for illegal burning, an assault charge, a charge involving your dog, etc., then your insurer may decide not to renew your policy.
Leaving a Home Vacant for 60 Days
Most insurers will decide not to renew a policy on a home if they discover that it has been left vacant for 60 days.
Giving Incorrect Information
If your insurance company discovers that you gave them incorrect information when you purchased the policy, such as giving the incorrect number of residents or not disclosing that you had a dog, you can face non-renewal or cancellation of your policy.
Be mindful of these triggers to avoid a surprise non-renewal letter, and work with your independent agent to keep your home properly insured
What To Do
If insurance for your home has been cancelled, and you have a mortgage, once the mortgage company has alerted you to the requirement to have active coverage, they will provide lender-placed insurance on your home if you can’t find coverage.. Lender-placed insurance is expensive and only covers the dwelling. No coverage is provided for your personal property and no personal liability coverage is provided (meaning no protection against lawsuits). Mortgage companies usually recommend that borrowers find insurance in lieu of lender-placed coverage.
Regarding the reason for cancellation or non-renewal, an independent agent should have at least one coverage replacement option for you to consider. With over 30 property insurance companies to shop amongst, Emerge Insurance Agency has found comprehensive coverage at an affordable premium for many Floridian. Call us and discuss your individual needs.