What To Do If Your Insurer Doesn’t Renew Your Homeowners Insurance
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While home insurance isn’t required by law, it’s important to have it if you’re a homeowner. It can protect your personal belongings from fire, windstorms, theft, vandalism, and other hazards. Plus, if you have a mortgage your lender will require you to have home insurance.
But in some cases, your insurance company may choose not to renew your policy.
Here’s what you need to know about nonrenewals of home insurance:
What is a notice of nonrenewal in homeowners insurance?
Your homeowners insurance provider may issue a notice of nonrenewal to inform you that it doesn’t intend to renew your current policy when it expires. The written notice will include the specific reason for the nonrenewal and the date the nonrenewal will be effective. A notice of nonrenewal typically serves as a warning and means that you need to find a new home insurance policy.
Credible can help you easily compare home insurance policies from multiple providers.
Reasons why your homeowners insurance is not renewed
A homeowners insurance provider may choose not to renew your policy for a number of reasons, including:
- Decrease in insurance score: Home insurance carriers in some states use an insurance score to predict how likely you are to file a claim. This score is largely based on your credit score and claims history. Insurers prefer policyholders with high insurance scores, as they tend to file fewer claims. If your insurance score has gone down significantly, a home insurance provider might decide it doesn’t want to serve you anymore.
- Large or frequent claims: Just like most businesses, home insurance carriers want to make as much money as possible. If you submit large claims or file claims on a regular basis, the insurer may drop you to protect itself from future claims that will cost money.
- Your location: Sometimes, homeowners insurance carriers decide they don’t want to renew policies in areas that are prone to natural disasters like fires, tornadoes, and earthquakes. While this is unfortunate, as it’s out of your control, it does happen. In addition, you may receive a nonrenewal notice from a home insurance carrier because it no longer services your area.
- Dangerous animals or dog breeds: If you own certain exotic animals or dog breeds that are thought to be dangerous or aggressive, you may receive a nonrenewal notice from your homeowners insurance provider. Many carriers consider dog breeds like German shepherds, pit bulls, and American bulldogs risky.
- Liability hazards: Your home insurance provider might not renew your coverage after an inspection because it discovers liability hazards. These might be an aging HVAC system or roof, structural issues, or features like a pool or trampoline.
Learn more: What You Should Know About Insurance Scores
Is there a difference between nonrenewal and cancellation?
Whether your homeowners insurance policy is canceled or nonrenewed, your coverage will be discontinued. But the rules for cancellations and nonrenewals are different. A nonrenewal usually happens at the end of the term, when your policy is about to expire.
A cancellation can occur within a certain amount of days after your policy term begins, for any reason. Once that period ends, a home insurance provider can only cancel your policy for a few reasons, like nonpayment, fraud, and a significant change in risk. The specific reasons for cancellation, however, vary by state and insurance carrier.
What rights do you have if your homeowners insurance is nonrenewed or canceled?
Insurance companies must follow certain guidelines before they cancel or choose not to renew your policy. While these rules vary by state, they usually require carriers to provide you with an advance written notice of cancellation or nonrenewal. For example, in California, the insurer must give you a notice of nonrenewal at least 75 days before your policy expires.
How common is a notice of nonrenewal?
Nonrenewals may be more common with some homeowners insurance carriers than others, especially when you file multiple claims or have hazards or incomplete repairs in your home. Keeping your home in good repair and paying your premiums on time may help lessen the chances of receiving a nonrenewal notice.
If you live in an area that’s prone to disasters, however, a notice of nonrenewal may be a valid concern. In this case, it’s a good idea to do whatever you can to protect your home against the elements and position yourself as an attractive policyholder to home insurance providers.
Let’s say your state is susceptible to flooding: You might want to raise your home on stilts or piers, install a sump pump, or grade your lawn away from the house. If tornadoes are common in your area, secure entry doors, install impact-resistant windows, and brace garage doors.
What to do when your homeowners insurance is not renewed
If you find out that your homeowners insurance carrier won’t be renewing your policy, consider following these steps:
- Speak to your home insurance carrier. If you believe the reason for your nonrenewal is unfair, reach out to the insurance provider. You might get a chance to keep your coverage if you take certain measures to reduce risk.
- Make home improvements. By making proper updates to your home, you may be able to maintain coverage after a failed inspection. Some home improvements you may want to consider include replacing your roof, installing hurricane-resistant windows, and resolving structural damage.
- Request a copy of your claim history report. The Comprehensive Loss Underwriting Exchange (C.L.U.E.) offers a claim history report that includes your policy information, such as name, date of birth, and policy number, and claim information such as date of loss, type of loss, and amounts paid. You can request a free copy of your report from LexisNexis once every 12 months, and dispute any inaccurate information.
- Shop around for a new policy. Do your research and change your homeowners insurance policy. Get quotes from at least three different providers and ask your social network for recommendations on carriers. You can also contact the insurance department in your state for guidance. Keep in mind that you won’t necessarily have to pay a higher premium after a nonrenewal, depending on the circumstances that led to the insurance carrier’s decision.
- Look into the shared-market option in your state. Many states offer Fair Access to Insurance Requirements (FAIR) Plans for homes that are considered high-risk. Even though these plans are usually more expensive than traditional home insurance policies from private carriers, they might make sense for your unique situation.
- Explore surplus lines. Surplus lines consist of highly specialized insurance providers that offer coverage that’s unavailable through traditional insurance carriers. The surplus lines available to you will depend on where you live and should be a last resort. If you’ve been rejected by three or more insurance providers, then consider this option.
- Consider the positives. At first, a nonrenewal notice may seem like an unpleasant surprise. If you receive one, however, realize that it can actually open up opportunities for new and better coverage options through home insurance providers you never considered in the past.
Use Credible to get a free home insurance quote. We get rates directly from our carrier partners, and not from third-party quote estimates.
Disclaimer: All insurance-related services are offered through Young Alfred.