Your homeowners insurance protects you and your family from financial devastation in the event your home is damaged or destroyed by a covered peril such as fire and smoke, windstorms, hail or lightning. Finding out that your homeowners insurance is canceled or not renewed can be stressful and scary. Understanding the types of home insurance cancellations, what causes them, and what you can do in each scenario can help you feel more confident managing your home insurance and help prevent a gap in coverage.
types of homeowners insurance terminations
There are several different types of homeowners insurance terminations. some have easy solutions, while others may mean you need to find a new insurance company to avoid a gap in coverage. These types of cancellations also apply to condo and renters insurance. The three common reasons for cancellations are:
Homeowners insurance lapsing can be the simplest type of problem to fix if you handle it quickly. a policy usually lapses if you do not make your premium payments. having a gap in coverage could put you at financial risk of not having insurance if your home is broken into or a disaster strikes.
Most homeowners insurance companies offer you a grace period in which you can make your payment to reinstate your coverage. If you are responsible for paying your premium, paying your past due bill right away is the fastest way to resolve a coverage gap issue, as long as you are still within the grace period. If your mortgage company pays your insurance from an escrow account, you may need to call your mortgage lender and request that they release the payment immediately if it hasn’t been paid on time.
You or your provider can initiate non-renewals. You can decide to start a non-renewal if you got quotes from other companies and decided to change insurance companies on the renewal date. Your insurance company may decide not to renew your policy for any number of reasons, including your claims history and the condition of your home. If you no longer fit into the company’s underwriting profile for various reasons, your policy may not renew.
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In other cases, your insurance company may no longer do business in your area or drop coverage after a number of costly claim scenarios in your community or state, such as a major flood or other natural disasters. Regardless of the reason, state regulations require insurance companies to notify you in writing if they decide not to renew your homeowners insurance at the end of your current policy term and explain why they are not renewing your coverage. When issuing a nonrenewal, insurers must provide you with 30 to 120 days advance written notice (regulations vary by state) to give you enough time to shop around and find alternative coverage. According to the Insurance Information Institute (Triple-I), you may not necessarily be charged a higher premium when switching to another company due to non-renewal, depending on the circumstances that led to your insurer’s decision.
As with non-renewals, you or your insurance company can initiate a cancellation. cancellations differ from non-renewals in that the last day of coverage does not necessarily coincide with the renewal date of your policy. For example, if your homeowners insurance policy begins and ends on January 1 of each year, a non-renewal notice will not take effect until the end of your current policy term. A cancellation notice can stop coverage anywhere within the policy term with advance notice required by your state’s insurance regulations.
Insurance companies may choose to cancel your policy for various reasons. If you misrepresented your identity or withheld information during the application process, for example, your policy may be cancelled, even if you recently purchased your home and policy.
One of the most common reasons insurance companies cancel home insurance policies is related to inspections. Insurance companies typically do exterior home inspections when new policies are written, and sometimes after that. For example, if your roof is in poor condition, your home has structural problems, or your company discovers that you own an ineligible breed of dog, you may receive a cancellation notice asking you to correct the problems or risk have your policy canceled in full.
State law requires insurance companies to send you written cancellation notice. Generally, companies must give you at least 30 days’ notice based on your state’s insurance regulations. This gives you time to discuss the cancellation with your provider, correct any concerns so the company can continue coverage, or find a new home insurance company.
A policyholder can also initiate a home insurance cancellation. maybe you found a cheaper company or you have sold your house. You can call your agent or insurance company to request that your policy be canceled on a specific date. you may be required to sign a cancellation form to confirm your request. You are also entitled to a prorated premium refund if paid in advance for the entire term of the policy.
what to do if your homeowners insurance is cancelled
Depending on the type of notification you receive, you can take steps to fix the problem. If you receive a lapse letter for your homeowner’s insurance policy, contact your insurance company or agent immediately and make up the back payments. Once you’ve reinstated your policy, you may also need to let your lender know, as mortgage companies generally require home insurance. If your policy is cancelled, your lender may buy a new home insurance policy on your behalf and expect you to pay for it, even if it is much more expensive than your current expired policy. this “forced placement” and does not include any coverage for your personal property like a standard homeowners insurance policy. It’s important to let your lender know if your coverage has been reinstated so you can avoid this type of scenario. If you receive a lapse in coverage letter and your insurance is paid through an escrow account, you can contact your mortgage company and ask them to send payment to your insurance company as soon as possible.
If you receive a non-renewal notice, your first step is to find out why your policy is being terminated. the letter you receive will likely include an explanation, or you can call your provider or agent for more information. Depending on the situation, you may be able to make changes to your home or policy that will satisfy the insurance company and convince them to keep your coverage.
Just like a non-renewal, if you receive a cancellation notice, talking to your insurance company or agent is a good first step. If your homeowners insurance was canceled after an inspection, you may be able to make necessary changes to your home, such as repairing or replacing a deteriorating roof. this could be enough for the company to rescind the cancellation and keep your coverage.
If you can’t convince your insurance company to keep your policy, it may be more difficult to find coverage, especially if you have numerous claims or your home is in poor condition. If you’re having trouble finding affordable home insurance after a cancellation, check with your state insurance department or a local insurance agent. they can provide a list of insurers that are tasked with providing coverage to high-risk homeowners in your area.
frequently asked questions
why is my homeowners insurance canceled?
There are many reasons why your home insurance could be canceled or not renewed. Your insurer must provide you with a notice of cancellation or non-renewal that contains an explanation of its action and gives you a specific amount of time before your coverage ends. your coverage may have lapsed due to non-payment of premium, your insurance company may decide not to renew your policy due to claims you have made, or significant problems may have been discovered during the insurer’s inspection of your home, among others. other reasons. In hurricane-prone states like Florida, your insurer may issue a notice of non-renewal because your roof is more than 10 years old, regardless of its condition.
Can I challenge the cancellation of home insurance?
You may be able to challenge a cancellation or non-renewal, depending on the situation. If you have an agent, you may be able to work directly with your insurer’s underwriter to reach a compromise, or you may be able to call your company directly. If you’ve filed numerous claims, for example, you may be asked to increase your deductible or drop certain coverage in exchange for the company keeping your policy. however, it may be a good idea to get quotes from other homeowners insurers as backup so you don’t have to scramble to find coverage quickly if your negotiations fail.