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What to Do When Your Homeowners Insurance Gets Cancelled

Insurance
You receive a letter in your mail from your insurance company: bad news. Your insurance isn't being renewed this year. In fact, it's not being renewed at all, because your insurance company has decided that it's not in its best interest to continue servicing you. What do you do now?

When Can Your Homeowners Insurance Get Cancelled?

When most people talk about insurance policies getting cancelled, they're really talking about nonrenewal. An insurance company can decline to renew you at any time, just like a landlord can decline to renew a lease. In fact, the insurance company doesn't need any particular reason to do so.

If you've put in a few claims in the past year or if you've put in a particularly expensive claim, it's possible that your insurance company will decide that you aren't worth the risk. Insurance companies put a lot of work into their algorithms, which are designed to identify clients that they can and can't make money from.

Of course, your insurance actually can get cancelled as well. A cancelled policy is a policy that is terminated mid-term. An existing policy can't be cancelled in this way unless there's something seriously wrong with your house. A common reason this may happen is if the insurance company inspects your home and determines that you were untruthful about the condition of your home.

Your insurance could also be cancelled due to non-payment.

What Can You Do When Your Insurance Gets Cancelled or Non-Renewed?

A cancellation or non-renewal is not going to directly impact your ability to find another insurance company. There's no list of individuals who have been cancelled, like an eviction; you'll still look exactly the same to another insurance company that you did before.

However, the underlying cause for the cancellation is going to affect you. Insurance companies can see how many claims you've initiated in the past few years and they may decline to insure you because of this. Insurance companies can also inspect your home and see that it not insurable, if that is the issue that led to cancellation.

In regions that have had significant damage (such as Florida, which suffers severe hurricanes and storms), quite a few homeowners may find their insurance policies being cancelled because they are in a high-risk area and because they have made more than the average number of claims. All of these homeowners are going to have to find a new insurance company. 

Here's what you can do:
  • Contact your State Department of Insurance. Your State Department of Insurance will be able to give you information on the high-risk insurance companies that are available to in your area. 
  • Negotiate with your insurer. It's possible that you can get this decision over-turned, if you can explain why your claims were abnormally high. You can call up the ladder until you get a second decision, but do keep in mind that this could mean that your policy will be cancelled if you ever have another claim. 
  • Work with a smaller, local insurance company. Smaller companies are often more willing to work with their clients than large, national chains. 
You aren't alone in this problem, which is why high-risk insurance companies exist. You may need to ultimately pay more money for a policy, but you can stay insured. Ideally, you will also want to go without any major claims for some time. 

It can be difficult to find an insurance policy if you have a lengthy history of claims. However, it will be even more difficult to recover from an issue if you attempt to go without homeowners insurance. For more information about getting and maintaining coverage, contact the experts at Advanced-Insurance.net.