How To Avoid Having Your Home Insurance Cancelled
Article 2 of 6 in Understand Your Home Insurance Policy
Your home insurance can be cancelled for a variety of reasons, including a large loss, too many claims, or unacceptable risks found on the property. Whatever the reason your home insurance is cancelled, your next step is to find new home insurance coverage before your cancellation date to avoid any gap in home protection.
TIP: Before an insurance company can cancel your home insurance policy, it must provide written notice to the insured. Most states require written notice thirty days prior to the date of cancellation. Even if you feel your home insurance was cancelled in error, take advantage of these thirty days to shop for new home insurance!
Why Home Insurance is Cancelled
When a company cancels your home insurance, it must provide you with a written reason for the action. If you are unsure why your home insurance was cancelled, contact your agent or the insurance company and find out why you were sent a cancellation notice. Review some of the more common reasons that a home insurance policy might be cancelled below :
- Home found to be vacant- Your home insurance company may decide to cancel your home insurance policy if the insured property is found to be vacant. Review the vacant home insurance clause in your policy to find the occupancy conditions for coverage. Most home insurance policies state that if the house is vacant for more than thirty days, you must notify the insurance company. Once you notify the company, your policy for that home will be cancelled. If you know your home is going to be vacant, take a look at our article on vacant home insurance to prepare yourself.
- Too many claims in a policy period- Generally speaking, you won't have your home insurance cancelled for an occasional claim over a period of years -- even if one claim is major. But if you have too many claims during a policy year, your company may cancel your home insurance policy. Make sure you know the value of your home insurance claim and self insure yourself for ones that don't meet or barely meet your deductible. Save your good claim history, and only file high value or important claims.
- Large claims for damage you cause- Large claims can be costly to an insurance company, and if you cause the damage then your home insurance can be cancelled. You don't have to cause the damage on purpose: if you are irresponsible or unsafe then your insurer can respond by cancelling your home insurance. There are times where you can not help a large claim, make sure any claims you have are out of your control by keeping your home and structures safe.
- Unacceptable risks found on the property- Property found in disrepair can cause your home insurance to be cancelled. At the time of your home insurance policy's renewal, an underwriter may request a curb side inspection and photos of the home. Sometimes this is done to spot check the condition of a property, and a home in disrepair can result in the policy being canceled. Things like a leaky roof, old and unsafe pipes, or kitchens that are potential risks of fire can cause an insurance company to send you a home insurance cancellation notice at renewal. The only thing to do at this point is try to correct the condition or make the repairs as soon as possible, and call your insurance company to ask them to reconsider. Keep your home in insurable condition.
- Poor payment history- Your payment history is also reviewed upon renewal of your home insurance policy. Usually this alone may not get your home insurance cancelled, but this in conjunction with some of the factors above will make you more of a target for cancellation. Paying your home insurance policy's premium through your mortgage escrow or automatic deduction of a savings or checking account will ensure that your payments will be timely.
- If you have not paid your home insurance policy premium by the due date, most insurance companies will have a grace period of thirty days in which you can make a payment. As long as you can get your premium paid within the grace period, your coverage will stay in affect without interruption. If you have a claim in that period, you will be required to pay all premiums due before a claim can be paid. Check with your insurance company to see what the grace period is in your state.
TIP: Your home insurance company may have additional reasons to cancel your policy. Check your policy, ask your insurer, and be aware of any reasons that your policy can be cancelled. Cancelled home insurance can be costly, so try to avoid it!
Where to Go After a Home Insurance Cancellation?
If you have recently had your home insurance policy cancelled, you want to get a new home insurance policy as soon as possible. If you have had a claim during this time period, you may find this hard to do. A lot of insurance companies have underwriting guidelines that prohibit writing for a new policyholder that has had a prior claim within the last three years. If you find it hard to place your cancelled home insurance policy with a new carrier, call you state department of insurance. Ask for an assigned risk carrier in your state that will accept a home with a prior claim history.
TIP: If you find yourself with an assigned risk carrier, you could be paying higher premiums. Even if you find a standard insurance carrier that will take your home, you still could be paying a higher premium due to your prior claims history. Usually after a three to five year period, you can switch back to a standard carrier and they will no longer count your previous claims.
If your home insurance has been cancelled, and you have questions about the insurance company's reason, click here to consult an insurance professional. If you need to replace your home insurance policy and need a quote on your new homeowners insurance policy,