If your homeowners insurance is canceled by your carrier, it may leave you feeling frustrated and nervous. It can also give you the chance to assess your current situation and shop for protection for your home at a lower price. Non-renewal of your insurance policy may also leave you with a lot of questions. Let’s review your options and explore why (and how) an insurance carrier may choose not to renew your policy.
Home Insurance Canceled vs. Non-Renewal: What’s the difference?
Despite having a similar outcome (dropped coverage), cancellation and non-renewal of your home insurance policy happen for different reasons. Home insurance companies are allowed to cancel your policy for any reason within the first 60 days of coverage. After those 60 days are over, cancellation usually happens for one of two reasons: failure to pay premiums or a breach of policy.
If your home is in escrow, you usually don’t have to worry about paying your home insurance premiums. The mortgage company typically handles those payments with the funds from your escrow account. Make sure to read your insurance statement clearly. You don’t want to lose vital coverage because you failed to pay your premiums in a timely fashion.
In addition to non-payment of premiums, insurance companies can cancel your policy if you’ve committed fraud. This includes lying about claims or falsifying information on your application.
If your insurance company decides not to renew your policy at the end of the period, you’ll receive a letter from them. Most insurers are required to give customers written confirmation between 30 and 60 days notice of non-renewal. However, that legal insurance cancellation notice requirement can vary from state to state.
How to Cancel Your Homeowners Insurance Policy
If you decide to cancel your homeowners policy, you will likely need to give your insurance company a call to start the process. Most insurance companies won’t let you initiate cancellation of your homeowners policy online. After you state your intent, your insurance company will request cancellation in writing.
The homeowners insurance cancellation letter you send should include key information about your policy, including your name, address and policy number. Don’t forget to specify the preferred date of termination for your coverage.
Do I need to wait to cancel my homeowners insurance policy?
Policyholders can often choose to drop coverage any time after the initial 60 day period. Fees or penalties for early cancellation may vary by policy and carrier. Consult your policy documents or call your insurer for more information.
Do I get a refund if I cancel my homeowners policy?
If you’ve paid your policy in full before the end of the term, you can often receive a prorated refund. For monthly payments, you likely won’t be eligible for a refund. The reason? You likely haven’t paid enough of your yearly premium.
Common Reasons for Policy Non-Renewal by Carrier
As we’ve stated above, insurance companies can also choose not to renew your coverage. If your insurance company chooses not to renew your policy, causes for this decision can include:
- Filing too many claims: Policyholders with lots of claims can expect to be considered high-risk by insurance carriers. This elevated risk can lead to being dropped by your carrier. Too many claims may also lead to higher premiums when you shop for new coverage.
- Changes in coverage or area of coverage: Insurance carriers may decide to no longer offer coverage in a particular area for a variety of factors, such as increased cost due to frequent natural disasters.
- Changes to your personal profile: Insurers may decide you are no longer viable for coverage for a variety of reasons. Adding a business to your home, adopting a dangerous dog breed or making unauthorized updates to your home can impact their decision.
What happens if my homeowners insurance is canceled?
If your homeowners insurance has lapsed or is canceled, don’t panic. Start shopping for a new policy immediately. You want to quickly find coverage to ensure protection in the event that something happens to your home. Large gaps in coverage can negatively affect your rates and impact your approval for coverage.
How to Get Homeowners Insurance After a Lapse in Coverage
The best way to find insurance coverage after a lapse in coverage is to shop around with multiple insurance companies. While many companies offer discounts for loyalty or for a low number of claims, there are plenty of insurance companies out there. Insurance marketplaces such as SelectQuote can help compare rates from trusted insurance companies, expanding your carrier options.
If you find that rates are too high, consider exploring a plan with a higher deductible. High deductible insurance policies can help you lower your premium. They’ll also discourage filing frivolous insurance claims that may have led to your non-renewal in the first place.
If you’re still having trouble finding insurance coverage or you’re denied coverage due to these factors, consider last-resort coverage such as a FAIR (Fair Access to Insurance Requirements) Plan. FAIR Plans are administered by your state’s department of insurance. These plans are funded by private insurers that are registered with the state.
To qualify for a FAIR Plan, you may have to meet certain benchmarks for approval. Many states require proof that you’ve been turned down by no fewer than three insurance carriers before you can apply for a FAIR Plan. FAIR Plans have strict coverage limits. FAIR Plans often only cover dwellings and personal property at their actual cash value (not replacement), and they usually won’t include liability protection or expensive valuables coverage.
Questions about homeowners insurance coverage? SelectQuote can help.
Whether you are shopping for your first home insurance policy, decided to cancel your existing one or simply need help finding coverage after non-renewal, SelectQuote can help. We can answer your home insurance questions and compare different policies from a variety of national insurance carriers, gather insurance quotes and help you find a policy that fits your needs. To learn more about your home insurance coverage options, get started on a free quote today.