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Home insurance companies can cancel your policy for many reasons. Here are some common reasons for cancelation, as well as how you can get another policy if you're canceled and ways to make sure you're not canceled in the first place. 

A little over 63% of Americans own their home, but getting homeowners insurance can be arduous for some homeowners. Depending on where you live or how many claims you file, an insurer may not want to take on the risk of insuring you.

"The reason a policy would be canceled is that the risk has changed substantially for the insurance company," says Gina Clausen Lozier, an attorney at Berger Singerman LLP in Florida, who focuses on first- and third-party insurance claims and coverage analysis.

KEY TAKEAWAYS
  • Bad credit, multiple claims and, not paying your premiums are some of the reasons your insurance company may cancel your homeowner's policy.
  • Insurer must give a homeowner 45 days' notice of home insurance policy cancelation.
  • Insurance providers usually offer some flexibility when it comes to payment due dates, including a 30-day grace period to allow you to catch up on payments.

So what happens if your homeowners insurance is canceled? Here's what you need to know.

How to get homeowners insurance after being dropped

An insurer can drop your home insurance policy if it finds that you or your property are too risky. Home insurance is based on risk. The riskier you are, the higher your premiums.

Though losing your coverage can cause you stress and frustration, a cancelation doesn’t mean that you won’t be able to find insurance coverage elsewhere. Insurance companies gauge risk differently.

If you lose your home policy, shop around to find the best home insurance for you. Get quotes from multiple companies for the same level of coverage, including the deductible. Ask about discounts. Insurers can also differ by discounts. Our guide to buying homeowners insurance has more details on how to get a policy that will suit your needs.

Why your homeowners insurance may get canceled

Couple discussing home insurance cancelation

Homeowners insurance companies may consider you a high risk for various reasons. Here are seven instances in which you could be considered high risk and an insurer may cancel your policy:

A bad inspection

If you have an existing policy, it may be canceled once it's up for renewal if the insurance company's underwriter inspects the property and finds an unacceptable risk. Potential fire hazards, pipes, kitchens and other structures in disrepair may cause a cancelation. The only way an insurer would consider reinstating your policy is if you address these issues and complete repairs.

Roof issues

If you have an older home with an older roof, you could be at risk for a home insurance cancelation. 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.

A roof's typical life expectancy is around 30 years. However, the older the roof, the more risk for your insurer. If your roof fails an inspection when you're up for a renewal, your insurer can cancel your insurance and require a roof replacement to reinstate your policy.

Multiple claims

Your home insurance policy can be canceled after filing too many insurance claims. Filing multiple claims may make your insurer think there are too many risks in your home, and this could result in a higher premium or cancelation. If you bundle your homeowners insurance with your car insurance, this may affect your auto policy, too.

"A homeowners policy could be canceled for too many claims and there could be a danger in having your policies bundled," says Keith Balsiger, president of Balsiger Insurance in Nevada. "Too many claims on the auto might cause the insurance company to cancel the entire policy. As a consumer, you will have to weigh the benefits of bundling and make an informed decision."

Living in a high-risk area

An insurer may also elect to not insure any properties in an area prone to claims via natural disasters, such as coastal regions. This could include areas prone to tornadoes, flooding and hurricanes.

For insurers, it all boils down to costs. If an area has a history of claims or a homeowner files multiple claims, an insurance company could deem the property an unacceptable risk and either raise the premium or cancel your policy altogether.

"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."

This is playing out now for some Florida homeowners. The Miami Herald reports that three carriers are canceling a total of 53,000 policies in June, citing deteriorating financial conditions. This is due in part to increased claims from hurricanes, but also from fraud, the report said.

"Florida statute Chapter 224 Part III allows insurers to cancel policies when the company would be placed in a hazardous financial situation due to an uptick in claims after hurricane damage or attorney’s fees to defend itself over fraudulent adjuster claims," the news report said.

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

Homeowners insurance covers your property and the contents within it and many often cover pets in your home. However, depending on state law, an insurance company typically maintains an exclusion list for pets they won't insure. 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. Full disclosure is important -- hiding details from your insurance company could give them a justifiable reason to cancel your coverage.

Not paying your premiums

Not paying your premiums can put you at risk for a home insurance cancelation if you also present a huge liability to your insurance company in other ways, such as:

  • You need a roof replacement
  • You've filed multiple claims

Insurance providers usually offer homeowners some flexibility when it comes to payment due dates, including a 30-day grace period to allow you to catch up on payments (though this varies by state). If you pay your entire premium during this grace period, you can maintain your coverage and your insurer will likely pay any claims made during that period if they meet the terms of your policy.

Bad credit

Most insurers now perform a credit check before issuing insurance. While this alone might not make you ineligible for coverage, it can affect how much you pay for it.

However, "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?"

How to get homeowners insurance after being dropped

Worried couple reading their homeowners insurance notice of non-renewal

Insurance companies are required to notify homeowners in advance of when they plan to cancel an insurance policy. If a cancelation takes place right after a policy is put in place, an insurer typically can give a homeowner 45 days' notice of cancelation of an insurance policy.

However, there are different laws for offering renewal or sending a homeowner a non-renewal notice. These vary by state.

In California, for example, a non-renewal notice must be sent within 45 days of cancelation. 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'll have several options to either reinstate your policy or find a new insurer.

If your insurance coverage was canceled because an inspection revealed 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 cancelation and request remediation or file a complaint with the state department that oversees the local insurance industry.

However, if your home insurance was canceled 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.

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.

"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," Balsiger says. "There are always high-risk options that might step in depending again on the severity and type of existing damage. These will, of course, cost more."

What to do if you 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 are more likely to file future claims. This could in the insurance company dropping you and may result in difficulty getting another policy. Fortunately, there are some companies that specialize in high-risk insurance but if that fails, too, you have some other last-resort options.

Assigned risk insurance services exist for this reason. 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 one 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.

Lender-placed insurance is also an option of last resort, Clausen Lozier says. Under these circumstances, your mortgage company will be notified that you no longer have insurance and will inform you in writing that they are placing insurance on your property -- becoming your insurance provider in the process.

"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."

How to get homeowners insurance with a bad roof

Distraught couple with a leaky roof

The best course of action is to get the roof fixed or replaced. A roof plays a vital role in protecting a home from the elements.

Insurers usually start getting concerned about roofs after 20 or 30 years. 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, so you may need to get repairs anyway.

If you get the roof repaired, that could be a good time to shop for a potential new policy from other companies. See if you can get lower premiums than your current insurer. Just make sure you compare the same level of coverage.

How long does canceled insurance stay on record?

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

This means, if you have had any claims or an insurer has canceled your policy within the last five to seven years, future potential insurers will be aware of this once they check the CLUE database.

How to ensure an insurance company doesn't cancel your home insurance

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

Don't file claims too frequently unless you absolutely must. Before filing a claim, you should also think about whether you'd be better off paying for the damage yourself. If you have a $1,000 deductible and your home experienced $1,000 worth of damage, you may want to pay yourself.

That's because filing a claim will likely increase your home insurance premium, so you want to gauge whether the money you'd get from an insurance claim would offset a potential rate increase.

Clausen Lozier also advises homeowners to ensure their insurance company inspects their home before they write a new policy. Videotape and photograph the property, so you have a record of what the property looked like at the time the insurance company insured it, she says.

Taking these steps could protect you in the event of a cancelation and increase the likelihood your policy is reinstated.