Having homeowners insurance is not a negotiable for many people (especially because a condition of have a mortgage is that you maintain insurance on your home), therefore it is important to understand why it can be canceled or up for non-renewal.
Homeowners Insurance Cancellation vs Non-Renewal
While many people use the term cancellation for both cancellation and non-renewal of a homeowners insurance policy, they are indeed very different. Cancellation is when the policy is stopped following notification of the policyholder. A policy that has been in effect for more than 60 days can not be canceled unless you are not paying your premiums or you have committed fraud in the information you gave the insurance company.
Non-renewal of a policy is an entirely different story. It is when a company has decided to not offer you another policy when your current one is up for renewal. It can happen for a variety of reasons from insurance policy changes to too many claims on your part to failure to meet certain guidelines the company wants met. With non-renewal, you typically have more time to shop around and find alternate coverage.
Reasons for Homeowners Insurance Cancellations and Non-Renewals
There are many reasons that homeowners insurance may be canceled or not renewed. In some situations, it is completely preventable by the homeowner. However, in many other situations, it is completely out of the hands of those who own the house.
Some of the preventable reasons for homeowners insurance cancellations and non-renewals include:
- Non-payment of premiums
- Non-disclosure to the company or giving incorrect information
- Failing to comply with safety guidelines, such as removing things like pools and trampolines
- Not meeting fire codes or other recommendations
- Too many claims on a policy
- Criminal charges that arise from an activity that raises the risk of your homeowners insurance policy
- Neglecting to perform necessary repairs in order to reduce t
- he risk to your homeowners insurance
- Leaving the home vacant for over 60 days
Some of the reasons for cancellation of homeowners insurance (in Florida you must be given 120 days notice) that are unpreventable include:
- A company deciding to no longer offer coverage in a particular area or state
- Change in company policies concerning the type of homes they will insure
- Discontinuation of the complete home line of coverage
- Limiting the number of policies in one geographic area
What to do When Your Homeowners Insurance is Being Canceled or Not Renewed
If you happen to be faced with your homeowners insurance being canceled or not renewed, you will be given some notice. How much will depend on whether or not you are being canceled for just cause like non-payment of your premiums or whether you are simply not being renewed at the anniversary date of your policy. Whatever the cause, you will need to start shopping around for a new policy and comparing quotes from other companies, especially if you have an existing loan on the property. The bank will require you to carry homeowners insurance to protect his investment as long as you owe money on the home.
Following cancellation for just cause, you will typically find it more difficult to find homeowners insurance. It will not be impossible, but it will likely be much more costly than before. Your insurance record will follow you and potential new insurers will know the reason for your cancellation, making you a higher risk for them.
If you are facing non-renewal, you may or may not have difficulty finding new coverage. If the non-renewal is because of a change in the company’s policies, you will likely be able to easily find competitive pricing from one of the many other insurance companies on the market. However, if your policy is non-renewable because of something you did or neglected to do, you will find higher rates and more problems finding companies to cover you in your future.
Compare Home Insurance Rates from Top Companies
When cancelled or non-renewed, the reason for that action must be taken into consideration when shopping for a new policy. That’s where an independent agent come in. An independent agent will know the underwriting guidelines of the companies, and can then shop among the companies that will allow for the condition or reason that created the cancellation or non-renewal.
EMERGE INSURANCE AGENCY