How To Get Homeowners Insurance After Being Dropped

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Your insurance company may cancel your home insurance policy for non-payment, filing excessive claims, committing insurance fraud, or misrepresenting your risk. You will then need to find a new insurer to avoid a lapse in coverage. Finding a new insurer after getting dropped may be challenging but not impossible. A last resort option is researching your state’s Fair Access to Insurance Requirements (FAIR) Plan or a force-placed insurance policy your mortgage lender buys on your behalf.

Can Your Homeowners Insurance Provider Drop You?

Your insurance company may refuse to renew your policy for several reasons, such as multiple late premium payments or a significant drop in your credit-based scores. In most cases, insurance companies are legally required to provide at least 30 days advance written notice of cancellation, explaining why they are canceling your policy. In more severe cases, like insurance fraud, your insurer may cancel your contract mid-policy.

Your insurance company may even drop you as a newly signed customer. Similar to a free trial period, an insurance company may take you on as a customer and then cancel your policy within a few weeks of your start date if they determine you to be excessively high risk. For example, Illinois law allows insurance carriers to cancel your policy within 60 days for almost any reason.

Your home insurance policy can be cancelled for non-payment, filing excessive claims, committing insurance fraud, or misrepresenting your risk.

Cancellation vs. Nonrenewal

A nonrenewal means your insurance company is canceling your policy after the full term expires. A  cancellation means the insurance company is terminating your contract mid-policy for specific reasons, such as late payments or insurance fraud.

Home insurance cancellation rights can vary by state but generally, your insurance company will need to provide you notice before ending your coverage.

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How To Get Homeowners Insurance After Being Dropped

If maintaining coverage with your previous insurer is impossible, you will need to find a new insurance company. The following steps show that finding a new policy is a similar process to buying your first policy.

  1. Reassess your coverage needs: Coverage needs can change over time. For example, you may need additional personal property or liability coverage if you own more valuables or installed a pool.
  2. Compare rates from multiple insurers: Comparing rates and coverages from multiple companies can help you lock down the lowest price available.
  3. Ask about discounts: Discounts can help offset higher premiums for risk factors related to your prior policy getting canceled or nonrenewed. Ask the insurance company about ways to save, such as installing security and safety devices.
  4. Avoid a lapse in coverage: Your insurance company is required to provide notice before canceling your policy. Ideally, you should schedule your new policy to start on or before your prior policy’s cancellation date.

In most cases, insurance companies are legally required to provide at least 30 days advance written notice of cancellation.

Alternative: Stop Your Policy From Getting Canceled

In some instances, you can avoid your current policy from getting canceled or non renewed if your insurance company requests that you make certain repairs. You can also appeal the cancellation.

  • Make the required repairs: If your home insurer requires you complete a home inspection and discovers an issue, you will need to complete the repairs by a certain deadline or you will be dropped. Keep in mind that If these were issues with your previous insurer, future insurers will frown on those issues, as well.
  • Appeal the cancellation: If you believe your policy was wrongfully canceled or renewed, you can submit an appeal to your state. For example, Illinois homeowners can request a hearing by submitting a written request to the Department of Insurance within 20 days of the cancellation date, explaining why their policy should not be terminated.

8 Reasons a Homeowners Insurance Company Might Drop You

Your insurance company may cancel your home insurance policy for non-payment, a drop in your credit score, filing too many claims and more.

#1 You Stopped Paying Your Insurance Premiums

Your insurance company will cancel your policy if they do not receive your premium payment by the due date. Some insurance carriers may offer a grace period but you should do your best to stay timely on your premiums. In some states, you may only receive a 10-day notice before your insurer cancels your policy for non-payment.

If you have an escrow account, your mortgage company should be responsible for paying your home insurance premiums (assuming you’re timely on your mortgage payments). If your home insurance company notifies you of late payments, contact your mortgage company immediately about this issue.

#2 You Filed Too Many Claims

Homeowners insurance will reimburse you for covered losses but multiple claims within a small period will likely mark you for nonrenewal. Insurers classify homeowners with an extensive claims history as high-risk and are more likely to save money and resources by dropping you as a customer than increasing your premiums.

According to Rocky Mountain Insurance Association, a non-profit insurance communications organization, homeowners insurance was meant to cover unexpected and large losses, not maintenance. Treating your policy like the latter may lead to excessive petty claims that could flag you as a high-risk homeowner.

#3 Your Insurance Credit Score Dropped

A significant drop in your credit-based insurance score typically signals you have excessive debt and you’re late on your payments. Since insurance premiums are paid at regular intervals, this can be highly concerning to insurance providers. Moreover, those with low insurance scores are more likely to file a claim according to several studies, and home insurance companies want to reduce the frequency of claim payouts.

#4 You Own a Dangerous Pet

Your insurance company may refuse to renew your policy if you bring home an aggressive pet. Dangerous breeds of animals can pose a liability risk that your insurance company may not want to be on the hook for. If you want to keep your policy active, you may want to negotiate to have your new pet listed as an excluded peril.

#5 You Added a New Pool or Trampoline Without Notifying Your Insurance Company

Before you install a pool or purchase a trampoline, always notify your insurance company because they need to adjust your premium for the increased liability exposure. Failing to notify your insurance company about your pool or trampoline is misrepresenting your risk and can result in your policy getting canceled.

Fortunately, some insurance companies may insure you if you meet certain safety precautions, like enclosing the trampoline and installing safety netting.

#6 You Committed Insurance Fraud

Insurance fraud is lying to your insurance provider on a claim to profit from the subsequent payout. Examples of homeowners insurance fraud include intentional damage to your property, requesting the contractor to include your deductible in their bill and overstating the value of stolen property. Beyond a canceled policy, you may be convicted of committing a felony in some states.

#7 Your Fail the Home Inspection

Glaring red flags in your home inspection can lead to a nonrenewal with your homeowners policy. Your insurance company may require a home inspection when you first buy the policy and before deciding to renew your contract. Home inspections are not always required before renewing the policy but can be more likely if you live in an older home or your home hasn’t been inspected for several years.

Red flags home insurers look for may include:

  • Old roof that needs replacing
  • Old HVAC system
  • Renovations that weakened your home’s structure

Your home insurance provider may give you a deadline to fix any issues before issuing a notice of homeowners insurance cancellation or nonrenewal. For example, Illinois homeowners must complete the required repairs within 90 days.

#8 You Misrepresented Your Risk

Another form of fraud, misrepresentation of your risk, can result from submitting an application with false or omitted information in hopes of securing a lower rate. Omitting information like not owning pets or a trampoline reduces your risk profile, typically resulting in more affordable home insurance.

Vacant homes are also at a higher risk for crime, like vandalism or burglary. Therefore, insurers generally charge higher premiums for vacant homes. If you do not notify your insurance company that your home is vacant, your insurance company may cancel your policy for misrepresenting your updated risk.

Comparing rates and coverages from multiple insurance companies can help you lock down the lowest price available.

What if You Can’t Find a New Policy?

If you’re unable to find a new policy in the private marketplace, you can turn to your state’s FAIR plan or your lender may purchase force-placed insurance on your behalf.

Look Into Your State’s FAIR Plan

FAIR Plans is a state-mandated insurance program that serves homeowners who are continuously denied coverage in the traditional marketplace — usually because of multiple risk factors associated with the homeowner or the property itself. While coverage is available, it is very limited.

For example, the California FAIR Plan serves many homeowners who are denied coverage because they live in wildfire-prone areas. However, the base policy only insures the homeowner for three of 16 common perils.

If your home insurer cancels or will not renew your policy, you should notify your mortgage lender.

Your Lender Will Buy an Expensive Policy on Your Behalf

Also called lender-placed insurance, force-placed insurance is a homeowners insurance policy that your mortgage lender purchases on your behalf if you do not meet their home insurance requirements. If the lender discovers you are uninsured, they will send notice that you have at least 45 days before they purchase insurance on your behalf. You will want to find a new policy before then because force-placed insurance is generally more costly than a policy you purchase on your own.

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Is it difficult to get home insurance after being dropped?

Finding a new insurance company after getting dropped can be challenging if you committed fraud, live in a high-risk area or have filed excessive claims. If you’re unable to find insurance in the traditional marketplace, consider looking into your state’s FAIR plan for alternative insurance coverage.

Can I cancel my homeowners policy at any time?

Yes, you can cancel your homeowners insurance policy at any time but if you have a mortgage you’re required to have an active policy. If you’re switching carriers, be sure its start date does not create a lapse in coverage, which will raise your rate.

Are there penalties for canceling home insurance?

There are generally no penalties for canceling a homeowners insurance policy and switching carriers. However, failing to find a new carrier can create a lapse in coverage that can lead to higher premiums in the future and no financial protection when your home suffers an unexpected loss.

What happens to my mortgage if my homeowners insurance is canceled?

If your home insurer cancels or nonrenews your policy, you should notify your mortgage lender that you are shopping for a new provider. If you’re unable to secure coverage, your lender may buy an expensive policy, called force-placed insurance, on your behalf.

Key Takeaways

  • You will need to shop around for a new policy right away to avoid a lapse in coverage if your insurance company cancels or nonrenews your policy.
  • Reasons your insurance company may cancel or not renew your policy may include multiple late premium payments, a low credit score, failing a home inspection or committing insurance fraud.
  • Your state’s FAIR Plan may offer coverage to homeowners who are unable to qualify for coverage in the traditional insurance marketplace.
  • Failure to find home insurance after getting dropped can result in your lender buying an expensive policy on your behalf.

Need to find homeowners insurance after getting dropped? SmartFinancial’s FREE online tool can help you compare multiple insurance companies in minutes to find you the lowest rate available. Just enter your zip code below or call 855.214.2291 to receive your free homeowners insurance quotes.

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