Reasons Why Your Homeowners Insurance Company Might Cancel Your Policy
Homeowners insurance companies routinely review policies to decide whether to renew or cancel them. Your insurer could decide to cancel your policy for several reasons, but you might be able to convince it to reconsider.
Too Many Claims
A homeowners insurance company might cancel a policy if a homeowner filed several claims in a short period of time and the company paid out more than it collected in premiums. If the claims were related to a common problem, you might be able to persuade the company to keep you as a customer if you made changes or repairs to address the underlying issue and prevent future claims. The company might also be willing switch you to a policy that excluded that specific peril or that had a higher deductible.
If you put off maintenance for so long that your house is dangerous, the insurance company might be unwilling to cover you. The risk of damage to the house, its contents and people could simply be too great for the company to accept, unless you offered to make major repairs to make the house safe.
Change in Risk
Perhaps you made a change to your property that increased the risk of an accident. For example, if you installed a swimming pool, a child could drown, which could result in a liability claim against the insurance company. The company might be willing to continue to insure your home if you installed a fence with a locked gate and alarm around the pool.
If you haven’t paid your premiums on time, the insurance company might decide to cancel your policy. If you lost your job or had an unforeseen medical problem that left you unable to work, the insurer might be willing to work out a payment plan and keep you as a customer.
An insurance company also considers the behavior of policyholders. If you have a criminal record, the company might be concerned about damage or liability related to future illegal acts that you might commit on the property. If you caused intentional damage to your home to file an insurance claim and got caught, the company could cancel your policy.
Sometimes an insurance company makes individual policy decisions by looking at characteristics of a wider area. For example, if your home and others in the neighborhood were burglarized recently, the insurance company might consider the entire area too risky to insure. It might be willing to keep you as a customer, however, if you installed a home security system.
Talk to Your Insurer
If your homeowners insurance company has notified you that your policy will be canceled, call and discuss the reason for the impending cancellation and find out if there’s anything you can do to change the company’s decision. If not, you’ll need to start looking for coverage with another company before your current policy ends.