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Homeowners insurance can help protect you from financial disaster in case fire, vandalism, or other covered perils cause damage to your home. It can also help cover medical costs if someone is injured on your property. However, unexpected cancellations or nonrenewals can leave your home and wallet vulnerable.
Generally, insurance companies can only cancel your homeowners policy for a few reasons: missed payments, misrepresentation on your application, or fraud. But providers can choose not to renew your policy for many reasons, including new pets, a large number of claims, and credit score changes.
Home insurance cancellation and nonrenewal laws vary by state — check with your state’s insurance department to learn the specific laws. Fortunately, you have ways to help you get reinsured, such as Fair Access to Insurance Requirements (FAIR) programs. Here’s what you need to know to avoid cancellation or nonrenewal of your policy.
An insurance company may cancel or choose not to renew your homeowners policy for several reasons:
Nonpayment of premiums: Missing a payment on your homeowners insurance can result in policy cancellation. Some insurers offer a grace period, giving you extra time to make a payment to prevent a lapse in coverage.
You provided false information in your insurance application: An insurance provider may cancel your policy if it uncovers that you weren’t forthcoming on your application, such as misrepresenting your home’s condition or omitting the presence of high-risk dog breeds.
Failure to occupy the property:Vacant properties are more vulnerable to crime and accidents, so your insurer may cancel your policy if your home is vacant for more than 60 days. Exact time frames may vary by state, though, so check with your state’s insurance department to learn its regulations regarding home vacancy and insurance.
House falls into disrepair: Your insurer may choose not to renew your homeowners policy if you fail to keep up with general maintenance or neglect severe structural issues, such as an old roof or faulty electrical wiring.
Certain types of pets: Welcoming a new pet into your family can affect your homeowners insurance. For example, an insurer may decide not to renew your policy if you adopt a dog breed it considers high-risk.
Changes to your credit score: Your provider may not renew your policy if your credit score drops significantly. Make sure to pay your credit card bills and loans on time to keep your credit score strong.
Location risk: Your insurer may not renew your policy if your area is at a high risk for crime or natural disasters. It may, however, just raise your rates rather than not renewing your policy.
Too many claims: Your insurer may decide not to renew your coverage if you file too many claims during your policy period. Alternatively, it may raise your rates to balance the amount of coverage it’s providing to you.
Nonrenewal vs. cancellation: What’s the difference?
Nonrenewal: You may receive a nonrenewal notice if your insurer chooses not to renew your policy at the end of your current term. Nonrenewal can occur for various reasons, such as changes in your home’s risk profile or if the insurance company stops offering coverage in your area.
Cancellation: In some cases, your insurance company may cancel your policy before the expiration date. Generally, the insurer must notify you at least 30 days before the cancellation goes into effect, though the exact time frame varies by state. A provider may cancel your policy due to nonpayment of premiums, misrepresentation on your application, or fraud.
What to do if your homeowners insurance is canceled
If your homeowners policy is canceled, here’s what to do next:
Try to resolve the issue. You may be able to get your insurer to reinstate your policy if you resolve the reason for cancellation. For example, completing requested repairs may be enough for the provider to consider reinsuring you.
Talk to your insurance agent. Ask for help from your insurance agent if you have one. Your agent should be able to advise you on where to look for coverage or direct you to state resources.
Shop around for coverage.Comparing homeowners insurance quotes from multiple providers is the best way to find the lowest rates for your needs. Pay close attention to coverage amounts, exclusions, and the company’s financial strength.
Find a policy you like and apply. Once you find a new policy that suits your needs and budget, fill out the application online or call a licensed representative to walk you through the process.
What to do if you can’t find homeowners insurance after cancellation
It’s challenging to find homeowners insurance after cancellation, especially if you live in a high-risk area. However, you can still shop around for providers willing to insure you and look into FAIR Plans in your state.
FAIR Plans are state-sponsored programs that offer insurance to homeowners who can’t obtain coverage through the standard insurance market. FAIR Plans can cover high-risk homes, such as those in areas prone to natural disasters and crime, and homeowners with long claims histories.
The process to apply for a FAIR policy varies by state but typically involves calling your state’s insurance department to inquire about your options. You may have to prove that you were denied private insurance coverage as part of the qualification process.
Though FAIR Plans are valuable for many otherwise uninsurable homeowners, you should consider the benefits and drawbacks.
Availability: FAIR Plans provide coverage to homeowners who wouldn’t otherwise qualify for traditional insurance plans, typically because their home is in a high-risk area or they have a lengthy claims record.
Better coverage in some areas: Some beach and windstorm FAIR Plans offer more thorough coverage in certain coastal areas than the voluntary insurance market.
Coverage limits: FAIR Plans have limited coverage compared to traditional plans, as they’re only meant to provide coverage for catastrophic events. They don’t typically offer loss-of-use or personal liability coverages.
Price: FAIR Plans are typically more expensive than a standard home insurance plan.
What to know about a lapse in homeowners insurance
A lapse in homeowners insurance occurs when you miss multiple premium payments in a row. If your homeowners insurance lapses, you’ll no longer have coverage for any damages or losses that may occur to your home or personal property. It also means you’re violating your mortgage contract, since your lender requires you to always have active homeowners insurance.
If your home insurance policy lapses, your lender will purchase coverage on your behalf — this is known as force-placed insurance. These insurance policies are typically more expensive and offer fewer protections than the coverage you could purchase on your own.
How to avoid homeowners insurance cancellation
There’s no way to guarantee an insurer won ’t cancel your homeowners insurance, but you can take steps to help reduce your risk:
Be honest on your application. Withholding information on your homeowners insurance application is grounds for cancellation. Even if your application is approved, the insurer could uncover the truth later and refuse to pay a claim.
Pay your premiums on time. If you have a spotty payment history, an insurer is more likely to cancel or not renew your coverage. Consider enrolling in automatic payments if you have trouble remembering your due date.
Stay on top of home repairs. Keeping up with maintenance tasks and repairs can keep you on good terms with your insurer and decrease the likelihood of cancellation.
Speak with your insurance agent before making changes. Check with your insurance agent if you’re unsure how something will affect your policy, such as adopting certain types of pets or getting a pool or trampoline.
Here are answers to some commonly asked questions about home insurance cancellation.
What if you can’t get homeowners insurance because of claims?
If your insurer cancels your policy due to multiple claims, try shopping around for a new policy with a different insurer. If you can’t find coverage with a private insurer, you may be able to obtain insurance through your state’s FAIR Plan.
How many claims can you make before your insurer cancels your policy?
There’s no one answer to this question. It depends on the severity of your claims, what caused the claims, and which insurer you have a policy with. Speak with your insurance agent before filing a claim to determine if it’s worth it.
How long does a home insurance cancellation stay on your record?
Insurers may report policy cancellations to the Comprehensive Loss Underwriting Exchange (CLUE.) This information can stay on your record for five to seven years. A cancellation on your CLUE report doesn’t mean you can’t get another insurance policy, but it may make it more challenging.
What happens to your mortgage if your homeowners insurance is canceled?
Your mortgage contract requires you to carry homeowners insurance. If your insurer cancels your policy, your mortgage lender will purchase coverage on your behalf, known as force-placed insurance. This coverage is typically more expensive and offers fewer protections than what you could find yourself, so it’s best to secure a new policy before the lender has a chance to act.
What is a FAIR Plan?
FAIR Plans are state-run programs that offer homeowners insurance to people who can’t get coverage on the traditional market. FAIR Plans typically cover homes in high-risk locations, areas prone to natural disasters, and homeowners with an excessive claims history.
Theresa Stevens is a personal finance writer based in Boston, Massachusetts. Her work has been featured in Forbes Advisor, Bankrate, and more. As a former financial advisor, she has first-hand experience helping people solve their money challenges. When she's not writing, you'll find her trying out new karaoke spots or planning her next trip abroad.