Losing your homeowners insurance coverage can be stressful, especially if it happens unexpectedly. Whether your policy is canceled mid-term or your insurer decides not to renew it, finding replacement coverage can feel overwhelming.
Home insurance companies may cancel or decline to renew policies for many reasons, including changes in a property's condition, an increase in claims, growing disaster risks in a region or broader business decisions that lead insurers to reduce coverage in certain markets.
The good news is that insurers are generally required to provide advance notice before canceling or non-renewing a policy. That notice gives homeowners time to explore other coverage options, compare quotes and take steps to avoid a lapse in protection. Here's what to do if your homeowners insurance policy is canceled or not renewed.
1. Determine why your policy won't be renewed
When you receive your nonrenewal notice, carefully review the document to find out why you're being dropped. Potential reasons include:
- You've filed too many claims
- Changes to your property have increased your risk
- The insurer is dropping that line of coverage
- The insurer is reducing its exposure in your area
- You've committed insurance fraud
- Your credit score has dropped
If you disagree with the reasoning or you want more details, reach out to the insurance company to learn more. Depending on the situation, you may be able to get the insurer to reconsider.
If you believe that the decision is unfair, you may choose to contact your state's insurance department for assistance.
2. Shop around for coverage
Depending on the reason for nonrenewal, you may be able to easily switch to a different insurance carrier. Take your time to shop around and compare quotes from multiple insurers to find the best price for the coverage you need.
It's important to note that getting dropped from your previous insurance provider won't necessarily result in higher premiums with a new one. However, if you were dropped due to hazards, excessive claims or fraud, it can be difficult to find a carrier willing to work with you.
In this case, you may need to turn to a state-run insurance program. Often called Fair Access to Insurance Requirements (FAIR) plans, these policies are designed for people who can't get coverage with a private insurer. Just keep in mind that your premiums may be higher for only basic coverage.
Use the tool below, powered by Bankrate, to explore and compare some of today's top home insurance offers:
3. Improve your home
If your insurer isn't renewing your policy due to liability hazards, making some improvements may help you overturn the decision or improve your chances of securing a policy with a different company.
Potential steps you can take include:
- Replacing your HVAC system
- Repairing on replacing your roof
- Getting back on track with home maintenance
- Removing risky items, such as a trampoline
- Updating your plumbing or electrical systems
- Installing a security system or fire alarm
As you make improvements, be sure to document your upgrades with receipts, permits and before-and-after photos.
You can share these with your current or prospective insurer to demonstrate reduced risk and potentially qualify for better coverage or lower premiums.
4. Notify your mortgage company
Homeowners insurance isn't mandated by law, but most lenders require it to protect their investment. Anytime you switch home insurance companies, you'll need to contact your lender to let them know about the change.
It's important to understand that if you don't find another policy before your current one expires, your lender may purchase a policy for you and pass the cost onto you. This is called forced-place or lender-placed insurance, and it can cost double what you'd pay for a standard home insurance policy.
What's more, a forced-placed insurance policy protects the lender, not you. So, it's crucial that you act quickly. Once you provide proof of coverage, the lender can remove the force-placed policy.
Protect your home by planning ahead
Getting dropped by your homeowners insurance provider can feel overwhelming, but you have options. Understanding the reason for the nonrenewal, exploring alternative coverage options, making home improvements and staying in touch with your lender can all help you take control of the situation.
Start by reviewing your notice carefully and gathering quotes from other insurers. With a proactive approach, you can find a new policy that meets your needs and protects your home.
