What to do if your homeowners insurance gets canceled

If your home insurance is canceled or non-renewed, you'll need to find new coverage as soon as possible. Fortunately, homeowners insurance can't be canceled without notice. You will have time to find new coverage or solve the problem.

Why would homeowners insurance get canceled? An insurance company can cancel your home insurance policy only for specific reasons that are spelled out in state law. Those reasons are also listed in your policy. The most common reason for homeowners insurance to be canceled is that something about your property has become too risky, or the company has discovered a risk it wasn't previously aware of.

It could be that your homeowners insurance was canceled because of roof wear and tear, or other areas of the property in a state of disrepair, which are things you can correct. There are a few other reasons a home insurance policy can be canceled, however.

Examples can include misrepresentation on your application or filing too many claims. When this happens, the insurance company may cancel or non-renew your policy. Not all cancelations are directly related to your home. While an insurer generally can't cancel a single policy due to in increase in storm damage, it could stop writing policies in a high-risk area, or even go out of business. Florida's volatile home insurance market is a good example.

If you lose your home policy, buying homeowners insurance can become more difficult. Read on to find out why home insurance policies are canceled and what steps to take if it happens to you.

Can your home insurance company drop you?

Yes, an insurance company can drop your policy in specific circumstances, although the word "drop" implies that it's sudden, when in fact the company is required to give notice of home insurance cancellation.

Home insurance is a contract, and if you violate that contract, your home insurance company can cancel your policy. Additionally, if you or your home become too much of a risk for the company, it can choose to non-renew the policy - which means that when the policy term ends the company will not renew it.

In some cases, it's not just you. Insurance companies may cancel all of their homeowners insurance policies in a certain area, withdrawing from that area altogether, or even go out of business. While events like these are not the homeowner's fault, they still leave people unexpectedly searching for new home insurance.

It's important to note that the contract goes both ways. An insurer has to have an acceptable reason to cancel your coverage. State laws outline the situations in which a home insurance company can cancel or non-renew a policy.

Is home insurance non-renewal the same as cancellation?

The difference between non-renewal and cancellation is really when the cancellation occurs, as both involve the insurance company canceling your policy.

Non-renewal is when the insurance company decides not to renew your policy at the end of the term. Essentially, it is canceling your policy effective on the last day of the current policy term. Most cancellations are actually non-renewals.

Cancellation is usually effective in the middle of the policy term. There are only a few instances when an insurance company can drop you mid-term. They usually involve things like insurance fraud or non-payment of premiums. Even in an “immediate” cancellation, the insurance company is required by law to give you notice so you can find new coverage.

What to do if the insurance company cancels your policy

If you receive a notice that your homeowners insurance is being canceled or non-renewed, there are a few steps to take.

1. Call your insurance company. Speak to a representative or agent and find out if there is anything you can do to reverse the cancellation. If a payment is late, you may be able to stop the cancellation simply by getting your payments caught up.
2. Start getting insurance quotes. Even if you might be able to resolve the problem with your current insurer, get some new options lined up just in case. You might even save money.
3. Complete any repairs. If incomplete repairs are causing issues with insurance, get them taken care of. You might be able to stop the cancellation, but even if you can't, most other insurance companies will also require that repairs be complete.
4. Get help. Contact your state’s department of insurance if you think you’re being treated unfairly or illegally by your insurance company. It can also help you if you can’t find new coverage for your home.

Insurance companies are required to notify homeowners in advance when a policy is being canceled. Laws regarding cancellation and non-renewal notices vary by state.

In California, for example, the insurer must send a non-renewal notice at least 45 days before cancellation. In many cases, if an insurance company fails to inform you in writing, your policy will remain in place until 45 days after the notice is sent.

Depending on why the insurance provider canceled the home insurance policy, you may be able to reinstate your policy. If not, you'll need to find a new insurer.

If the insurer canceled your coverage because of an unacceptable risk on your property, repairing the issue could result in your policy being reinstated. If your insurer still refuses to insure you, you can dispute the cancellation and request remediation or file a complaint with the state department that oversees the local insurance industry.

However, if the insurer canceled your home insurance because you filed too many insurance claims or gave false information on your application, it's unlikely that your policy will be reinstated and you may have difficulty finding another provider.

How to get homeowners insurance after being dropped

As soon as you know your insurance policy is being canceled, start talking to other insurance companies. An independent agent or broker can be helpful since they know multiple insurance providers and which accept houses that have been previously dropped.

You may need to look for non-standard coverage (coverage from a company that specializes in high-risk insurance) if the property needs repairs that you can’t afford to complete right now.

"Most insurance companies underwrite or review the eligibility of a property upfront. Existing damage, depending on how bad and what kind, could make a property ineligible for coverage with the 'normal' home insurance companies," says Keith Balsiger, president of Balsiger Insurance in Nevada. Balsiger suggests looking for state assistance.

If you have difficulty getting insurance, call your state's department of insurance and ask for information for assigned risk carriers in your area. The downside is that you'll probably pay higher premiums, but that's better than being uninsured.

FAIR Plans, or Fair Access to Insurance Requirements Plans, are also an option for high-risk homeowners. A FAIR plan allows high-risk homeowners to get coverage, but they often come with higher premiums and inflexible terms and conditions. More than 30 states offer this coverage. Find the list of states here.

Is it hard to get homeowners insurance after being dropped?

In most cases, yes. Finding a new homeowners insurance policy can be challenging if your home insurance has been canceled. Insurance companies consider a person's claims and coverage history when deciding whether they qualify for coverage.

Why would homeowners insurance get canceled or non-renewed?

Home insurance companies may cancel your policy for many reasons. Here are some common reasons a home insurance company can drop you.

A problem is found during an inspection. An insurer may cancel an existing policy on renewal if the insurance company's underwriter inspects the property and finds an unacceptable risk. Potential fire hazards, dangerous conditions, and disrepair are things that may cause a cancellation. An insurer might consider reinstating your policy if you address these issues and complete repairs.

Roof issues. If you have an older roof, you could be at risk for a home insurance cancellation. Some insurance companies require an inspection if your roof is at least 20 years old and others won't even insure your home if the roof is that age.

Multiple claims. Your home insurance policy can be non-renewed after filing too many insurance claims.

Living in a high-risk area. An insurer may also elect not to insure any properties in an area prone to claims via natural disasters, such as coastal regions. This could include areas with a high rate of tornadoes, flooding, wildfires, and hurricanes.

"Insurance companies would normally not react to one bad year," Balsiger says. "They do modeling and look at profitability over a period of time. It's not uncommon to have a year where the insurance company loses money."

For example, the major wildfires in California have prompted many insurers to look at reducing risk, which would include canceling policies. But the state of California blocked that option by imposing a one-year ban on dropping homeowners who live in areas affected by major wildfires.

On the other side of the country, cancellations are common in Florida, where companies are leaving or going out of business. According to Florida statute, insurance companies can cancel policies due to the financial strain of natural disasters like hurricanes.

If you're a Florida resident and your coverage is being canceled, our guide to the best homeowners insurance companies in Florida provides information on how to buy a policy.

Pets. Many insurance companies have an exclusion list for pets. This can include everything from exotic pets like a boa constrictor to certain dog breeds.

If your exotic pet or blacklisted breed bites someone or damages your neighbor's property and you must file a claim, your insurance company may cancel your policy if they weren't informed of the pet when they issued your coverage.

Not paying your premiums. If you fall behind on payments, your insurance company will cancel your policy.

Insurance providers usually offer homeowners some flexibility when it comes to payment due dates, including a 30-day grace period to allow them to catch up on payments (though this varies by state).

Bad credit. If your credit has taken a dive since your policy was issued, it might raise red flags on renewal.

"Credit along with a poor claims history might be used together to determine if an insurance company will provide coverage for you," Balsiger says. "In most cases, you will be offered coverage -- the question is will it be affordable?"

What happens when your homeowners insurance is canceled?

If your homeowners insurance is canceled, here are a few different things that could take place.

Your homeowners insurance rate might increase. If your insurance company drops your insurance due to non-payment of premiums, you will have to deal with increased insurance rates with another insurer.

You could find it challenging to get insurance in the future. Some insurance carriers consider you high risk if there is a gap or lapse on your insurance record, and they might refuse to provide insurance coverage.

Your mortgage company may purchase lender-placed insurance on your home. Lender-placed insurance, also called force-placed insurance, is an option of last resort, says Gina Clausen Lozier, partner at Berger Singerman Law Firm. This is a policy that protects only the mortgage company’s interests.

“The issue with lender-placed insurance is that it protects the mortgage company, but not the homeowner," Clausen Lozier says. ”Typically, it's more expensive and doesn't provide coverage for personal property and contents and doesn't cover additional living expenses if you have a loss and have to leave your home."

What if I can’t get homeowners insurance because of claims?

Too many claims can make you a high-risk homeowner. To the insurance company, this means you're more likely to file future claims. This could result in the insurance company dropping you and may result in difficulty getting another policy. You may have to consider a high-risk insurance company or state-assigned company until the claims fall off your record. These companies are chosen by the state to insure high-risk homes.

Will my homeowners insurance drop me if I make a claim?

In general, as long as you have been a good customer and haven't made many claims in the past, your homeowners insurance company will not drop you after one claim. It’s illegal to cancel your insurance policy just because you filed a claim.

But there could be reasons for policy cancellation, such as poor claims history, or you may have filed multiple claims.

How many claims can I make before my home insurance is canceled?

There's no set number of claims that can trigger a policy cancellation. It usually depends on the severity of claims and the number of claims you have filed during a specific period. It also depends on the type of claims, since an insurer generally can't cancel your policy for multiple weather-related claims.

So what do you do if you've already filed a claim and your insurer has dropped you?

Your insurer may still cover it if the incident happened during the policy period. However, if your policy was voided because of fraud or misrepresentation, you'll likely have to cover the damage out-of-pocket.

Can homeowners insurance be canceled due to wildfire risk?

Intense wildfires have wreaked havoc across California and other western states. In the wake of severe devastation, insurance companies are looking for a way to lower risks. In spite of the laws against it, it’s possible your insurance might be non-renewed due to wildfire risk.

As a homeowner, you can find ways to reduce risk by implementing fire safety measures around your home. According to Cal Fire, a few things you can do include retrofitting your roof with fire-resistant materials, keeping rain gutters clear, and trimming trees on your property. Many insurance companies in the state will offer a discount for these upgrades.

Beyond these preventative measures, homeowners seeking coverage in a high-risk area should check out their California FAIR plan options and premier carrier options.

How to avoid cancellation of your homeowners insurance

To reduce your risk of a home insurance cancellation, make sure you've addressed anything an insurer might deem an unacceptable risk. Keeping up with routine maintenance on your home can also help you avoid big-ticket repairs when it's time to renew your policy.

Don't file small claims. If the claim is not too much over the deductible, it might not be worth filing.

The Berger Singerman Law Firm’s Clausen Lozier advises homeowners to ensure their insurance company inspects their home before writing a new policy. She says to videotape and photograph the property so you have a record of what the property looked like at the time the insurance company insured it.

Frequently asked questions: Homeowners insurance cancellation