Home insurance might not be your favorite thing to think about, especially if you get a scary letter saying that your policy has been nonrenewed or canceled. Wait – can they even do that? Just drop your home insurance policy and leave you with no coverage? Well, the answer is yes, in certain circumstances. But first of all, we have to explain the difference between your policy being nonrenewed and your policy being canceled – they’re two different things, and the distinction makes a difference when you’re trying to get home insurance after losing your coverage. We’ll explain what nonrenewal is, what cancellation is, and why home insurance companies cancel insurance.
What’s the difference between cancellation and nonrenewal?
As we said, these are two different things (though both leave you in the frustrating position of having to get new insurance fast.)
Insurance nonrenewal: Definition
Nonrenewal is when your insurance company simply declines to renew your policy when the policy period ends. Basically, they don’t continue your insurance after it expires for the year. There are a few reasons your company might decide not to renew your policy, including…
- You’ve filed many claims
- You’ve filed large or expensive claims
- You frequently pay your bill late
- The insurance company simply won’t be offering that product or line of coverage in your area anymore
The insurance company should notify you with plenty of time for you to shop for new insurance before your current policy expires. (If you’ve been nonrenewed and you’d like some help shopping for new insurance, our team of agents would be happy to assist. You can fill out our online quote form or call us today and we’re at your service!)
Protect your home from fires. Get a quick homeowners insurance quote today.
Home insurance cancellation: Definition
Cancellation is when the insurance company drops you in the middle of the policy period. Now, if you’ve had your insurance policy for more than 60 days, there are only a few reasons that the insurance company has the right to cancel your policy. They should let you know ahead of time that they will be canceling your insurance so that you have time to make other arrangements.
Why can my insurance company cancel my policy?
Now, as we said, there are only a few reasons that your insurance company could cancel you if you’ve had your insurance for more than 60 days. Those reasons are…
Nonpayment.
If you don’t pay your bills, your insurance company has the right to cancel your policy.
Fraudulent behavior.
If you’re found to have acted in a fraudulent manner in handling your home insurance, your policy could be canceled. For example, if you deliberately provide fraudulent quotes for repairing your home after a loss or if you “overestimate” the items that were taken after your home was burgled, you could be caught for fraud.
Misrepresenting yourself on your home insurance application.
When you’re filling out your home insurance application, you have to be honest. If the company finds out that you weren’t truthful on your application, or you lied about any of the questions they ask, they could cancel your policy. For example, if your home is not in good shape and you say that it is, or you run a home business that you fail to mention in the application, you could be in trouble.
If you leave your home vacant.
Most home insurance policies will only provide coverage so long as someone is occupying the home. If the insurance company finds out that no one is inhabiting the home, they could cancel your policy. The reason for this is that if no one’s there, no one is looking after the house. The property could be burgled or vandalized. If a fire starts, there’s no one there to call the fire department, so the house could completely burn down and be a total loss. Anyways, if you’re going to be away from home, getting the right vacant home insurance is key.
Getting new insurance after being nonrenewed or canceled.
Okay, you’ve been dropped by your insurance company. Now what?
Well, you need to get new insurance. The only problem is that it can be tricky to get a new insurance company to take you on after you’ve been canceled or nonrenewed, depending on the reason for your coverage being dropped. If your insurance company simply stopped offering that product or line of coverage in your area, you might not have too much trouble because that’s out of your control.
However, if you were canceled for nonpayment, other insurance companies could be leery to take you on. They’re worried about getting paid and you’re now a higher risk. It’s the same situation if you’ve made lots of claims or if you’ve had a few big claims. And when you do find an insurance company who will offer you coverage, that coverage might be very expensive. Insurance companies have access to the Comprehensive Loss Underwriting Exchange (CLUE) database of reports. Your CLUE report gives your insurance history (including claims), so they’ll know if you’re a “good” risk or not. And if you’re not a “good” risk, you might end up with higher premiums.
Now, you’re probably wondering what to do after your insurance has been canceled. Here are a few tips for getting home insurance if you’ve been canceled or nonrenewed:
- Request a copy of your CLUE report so that you can check all the claims information is correct.
- Apply to other insurance companies.
- If you don’t have luck with other companies, check with your state about a FAIR (Fair Access to Insurance Requirements) Plan, which is a pool of insurers who are required to offer insurance to high-risk homeowners.
- Talk to the insurance company yourself to argue your case.
Protect your home from fires. Get a quick homeowners insurance quote today.
Yes, it might seem very unfair that your insurance company would just up and leave. But they can if they have the right reason. If your insurance has been canceled or nonrenewed and you need to find new coverage, our team of agents would be happy to help. We can help you get the home insurance you need. Get in touch by filling out our online quote form or giving us a call today.
Source:
https://finance.zacks.com/homeowners-insurance-allowed-cancel-policy-6910.html
https://www.thebalance.com/insurance-company-cancelling-policy-2645554