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An insurance company can cancel your home insurance policy for a variety of reasons. The most common reason is that you or your property have become too risky. 

Examples can include an increase in severe storms, lack of home maintenance that leads to disrepair 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. A company might go out of business or stop writing policies in a high-risk area. Florida's volatile home insurance market is a good example.

If you lose your home policy, buying homeowners insurance can become more complex. Below, we’ll explain why and how home insurance policies are canceled and what steps to take if it happens to you.

KEY TAKEAWAYS
  • The condition of your home, multiple claims, and not paying your premiums are some of the reasons your insurance company may cancel your homeowner's policy.
  • A non-renewal is a cancellation that occurs on your renewal date.
  • Insurers must give a homeowner 45 days' notice of home insurance policy cancellation.

Can your home insurance company drop you?

Yes, an insurance company can drop you. Home insurance is a contract, and if you violate that contract in any way, your home insurance company can cancel your policy. Additionally, if you become too much of a risk for the company, they can choose to non-renew you - which means they drop you as soon as that contract ends and cancel your renewal.

In some cases, it's not just you. Insurance companies may cancel all of their homeowners insurance policies in a certain area or even go out of business. While events like these are not the homeowner's fault, they still leave people without insurance and shopping for a new policy.

It's important to note that an insurer can't cancel your coverage for no reason at all. 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, they are 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 during the 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 your home insurance drops you

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

  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 by resolving the issue.
  2. Start getting insurance quotes. Even if you are able to resolve the problem with your current insurer, it’s vital to get some new options lined up. You might even save money.
  3. Complete any repairs. If you have repairs that are causing issues with insurance, you need to take care of them regardless of which insurance company you go with.
  4. Get help. Contact your state’s department of insurance if you think you’re being treated unfairly or illegally by your insurance company. They can also help you if you can’t find new coverage for your home.

Insurance companies are required to notify homeowners in advance when they plan to cancel an insurance policy. Laws regarding cancellation and non-renewal notices vary by state.

In California, for example, the insurer must send a non-renewal notice within 45 days of 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 live in a high-risk area, 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 company is dropping you, 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 for people who have been dropped or rejected. Insurance companies consider a person's claims and coverage history when deciding whether they want them as a customer.

Why would homeowners insurance get canceled or non-renewed?

Home insurance companies may cancel your policy for many reasons. Here are some common ones.

A bad 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, or a bad roof 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 playing out now for some Florida homeowners due to hurricanes. 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 don’t pay your premiums, 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 also 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.

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 law, 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.

FAQ's: Homeowners insurance cancellation

How long does canceled insurance stay on my record?

Insurance companies report things like claims and cancellations to the Comprehensive Loss Underwriting Exchange (CLUE) database. The CLUE records typically run anywhere from five to seven years.

What happens when a homeowners insurance policy gets canceled due to policy lapses?

Lapses occur when your current policy runs out and you don’t have new coverage. This concerns insurance companies because it makes the home more of a risk. It’s best to get new coverage before your old policy cancels, but if you do have a lapse, it might mean higher premiums and difficulty finding a new policy.

What happens to the mortgage if homeowners insurance is canceled?

If your homeowners insurance is canceled due to non-payment, the lender can take out a force-placed insurance policy and charge you for it.

How do you get homeowners insurance with a bad roof?

If your insurance company threatens to drop you or not renew your policy because of your roof, check with the insurer to see what’s required. Inquire whether it will still cover you if you replace or repair the roof.

You could also check with another insurance company. Insurers differ in how they gauge risk. An old roof will be a red flag to many home insurance companies, but shopping around is always an option.

Does loyalty matter when it comes to insurance?

In most cases, insurers will give their valued customers a loyalty discount when they renew their insurance plan. Most insurers offer a discount if you have been with them for years.

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