Seeing a homeowners insurance nonrenewal or cancellation notice might be upsetting, but you want to act quickly to get things back on track. Luckily, you have several options:
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Address your insurance company’s concern.
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Contest the nonrenewal.
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Apply elsewhere.
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Consider a high-risk home insurer.
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Turn to a state-run insurance carrier.
Let’s take a closer look at each of these possibilities.
Address the concern
Insurers can have several reasons for nonrenewing a policy, but the most common one is probably when the risk no longer fits their appetite – partly because there are so many variables an insurance carrier might use to determine what’s “acceptable.”
Geography is a big one. For example, some insurers have stopped providing coverage in high-risk or coastal areas. If your home is in a place your insurer considers undesirable, then there’s not much you can do about it.
But if your insurance company is concerned about something you can fix, like an aging roof, outdated plumbing, or inadequate wiring, then you may be able to address the issue and have your coverage reinstated.
To use this strategy, you should contact your insurer and let them know your intention to address the problem. If the insurance company agrees, you must provide proof of completion and documentation that the request has been satisfied. Often an inspection report will do the trick.
Cancellation notices are fortunately rarer than nonrenewals. The most common reason for a midterm cancellation is nonpayment. Luckily, your insurer may be able to reinstate your policy once you pay your premium.
Another common reason for cancellations is when the underwriters finds something about your home that is outside of their guidelines during the discovery period. This is a window of time that occcurs after a policy is bound during which insurers are allowed to review policies. Most insurance companies try to work with you to fix any issues they find during the discovery period, so be sure to talk to your representative about what steps you can take to keep your coverage.
Contest the decision
You can contest a nonrenewal status with your insurer. When using this tactic, you should be prepared to demonstrate why the renewal is unjust – which means you need to have a good case in the first place.
Probably the best argument, or at least the one that may have the best success if it’s true, is that your insurance company didn’t follow the appropriate steps in nonrenewing your coverage.
Every state has its own regulations for nonrenewals, and these can govern everything from the reasons for nonrenewing to notification timing. If you believe your insurer made a mistake somewhere along the line, you can appeal the nonrenewal directly with your insurer or ask your state’s Department of Insurance (DOI) to review the action taken by the insurer.
For example, let’s say your insurance company sent you a nonrenewal notice stating that your roof is older than the underwriting guidelines allow, but you have proof to the contrary. You could file a complaint with the DOI, which would then review the nonrenewal.
Apply elsewhere for a new homeowners insurance policy
If contesting the nonrenewal isn’t a possibility or doesn’t work, then your next option is to get coverage with another homeowners insurance provider.
This can be challenging in coastal environments where many insurers have reduced the number of policies they’re willing to underwrite or left the market altogether. However, it may be possible. Ask friends, family members, and co-workers to give you the name of their home insurance provider. Read our article about shopping for home insurance and reach out to new providers.
Consider a high-risk home insurer
With a significant number of insurers vacating the home insurance market, particularly in coastal states, high-risk home insurers could be an option.Typically, high-risk home insurance is offered by excess and surplus (E&S) insurance companies.
E&S insurers are also called “nonadmitted carriers” because they aren’t licensed by the state. This status gives them more flexibility when developing policies, so they can sometimes specialize in properties that are considered too risky for admitted carriers.
While E&S insurance companies aren't licensed in your state, they are still regulated, often through financial requirements that the company has to meet before it can set up shop.
Use your state’s FAIR plan or insurer of last resort
If all else fails, then you may need to turn to your state's market of last resort. These are state-run programs that make sure people can get the coverage they’re required to have.
In some states, the market of last resort is called a Fair Access to Insurance Requirements (FAIR) plan.There are 33 states, plus Washington, DC, offering FAIR programs:
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Alabama
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California
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Connecticut
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Delaware
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Florida
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Georgia
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Hawaii
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Illinois
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Indiana
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Iowa
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Kansas
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Kentucky
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Louisiana
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Maryland
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Massachusetts
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Michigan
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Minnesota
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Mississippi
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Missouri
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New Jersey
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New Mexico
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New York
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North Carolina
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Ohio
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Oregon
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Pennsylvania
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Rhode Island
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South Carolina
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Texas
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Virginia
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Washington
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Washington,DC
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West Virginia
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Wisconsin
Don’t see your state on this list? Chances are there’s still a state-run insurance program available to you. Check with your department of insurance for more information.
You should be aware that the premiums for FAIR and last-resort insurance can be significantly more expensive than an insurance policy through traditional private home insurance. Worse?They often provide very limited coverage.
What if I don't find a new policy after getting canceled or nonrenewed?
If you have gone through all of your options above, including looking at home insurance from your insurer of last resort, and still have not found suitable coverage, the options become increasingly risky.
Force-placed insurance
Force-placed insurance is home insurance that your lender places on your home if you don’t have your own coverage. It does this to protect its interests in your home, but you’re still responsible for the premium.
There are several reasons you want to avoid having force-placed insurance. Perhaps the most important is that the premiums are usually pretty steep.
Moreover, force-placed insurance protects the lender, not the homeowner, so it only covers the amount owed for the mortgage on the main structure. Your personal belongings and liability aren’t protected.
Self-insurance
Self-insurance means you have decided to take on the risks of insuring your home through your own financial resources.
We cannot emphasize enough how risky this option is. If you should experience a significant loss, the entire cost would fall on your shoulders. In a total loss, you could find yourself without a home but still paying your mortgage. You should also understand that your mortgage company most likely will not see self-insuring your home as meeting your obligation to have coverage.
Self-insurance is really only an option if you do not have a mortgage and your home is paid off. The risks, however, remain high. You want to exhaust all other options before going this route.
Why was my homeowners insurance not renewed?
When you receive a notice of homeowners insurance nonrenewel, it should include the reason (or reasons) that your insurance company has decided not to renew your policy. We’ve listed a few of the more common reasons here.
Claims history
Your homeowners insurance policy may be nonrenewed due to a higher-than-average claims history. This could mean you’ve filed multiple claims during the policy or you filed a particularly expensive claim during the policy term.
You should note, however, that weather-related or catastrophic claims are usually not held against you. In fact, most states have laws that prohibit insurance companies from using claims from major disasters as a reason for nonrenewals.
Your area has been designated as high risk
Insurers use historical data to determine if a particular location is risky or not. As they analyze their data, they may decide that your area is one that no longer fits their risk profile and stop offering policies. Several reasons can be at the root of this decision, including changing weather patterns and increased crime.
Property condition or liability concerns
Your home insurance policy may also be canceled due to your insurers' concerns over your current property’s condition. An aging roof or outdated wiring increases your chance of filing a claim, which may cause your insurance company to decide not to renew your coverage.
Similarly, changing liability risks may also generate a nonrenewal. For example, the addition of a pool or another attractive nuisance may make your insurer rethink your coverage.
The insurance company no longer operates in your area
Unfortunately, if you receive a nonrenewal notice from your insurance provider that no longer operates in your area, your only recourse may be to seek other coverage options.
Understanding the differences between insurance nonrenewal vs. insurance cancellation
Nonrenewals and insurance cancellations are different animals. A cancellation can happen for several reasons even after your homeowners policy has been in force for 60 days or more. For instance, your insurer may cancel your policy in some states if:
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You didn’t pay your premium.
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You misrepresented information on your application.
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You committed some kind of fraud.
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You failed to comply with underwriting requirements.
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There’s been a substantial change in the covered risk.
If you don’t pay or commit fraud, you’ve breached the terms of your contract with your insurer. The insurer is therefore within its rights to cancel the policy.
Sometimes your insurer may ask you to make fixes or updates to your home to help it meet underwriting requirements. If you don’t, your insurer may cancel your policy, even after you receive coverage.
Nonrenewals are different. They happen only when an insurance provider decides not to renew a policy when its term is up. State law requires insurance carriers to give homeowners a certain amount of notice if a policy will not be renewed. For example, Florida home insurance companies must give homeowners at least 120 days’ notice if they plan not to renew a policy.
The best place to find out the regulations for nonrenewals in your state is the department of insurance website.
