Can you be denied homeowners insurance?

Yes, you can be denied homeowners insurance if your home does not meet an insurer’s underwriting requirements. The reason must be allowed by law and based on risk, such as location, roof age, construction type or claims history. Knowing the denial reason helps you decide what to fix or where to shop next.

Insurance companies determine if your home is insurable based on the risk of a claim being filed. Some of the reasons an insurance company could deny coverage include:

  • Location in a high-risk area, such as a coastal zone or wildfire-prone region.
  • The age of the home and major components, particularly the roof.
  • Construction type and overall vulnerability to severe weather.
  • A history of past claims on the property or by the homeowner.

What to do if you're denied home insurance

If an insurer denies you homeowners insurance coverage, start by asking the insurer why you were denied, then shop with other companies because each carrier uses different underwriting rules. You can also work with an independent agent, make repairs or upgrades if the home’s condition caused the denial, or apply for your state’s FAIR Plan if standard coverage is unavailable. 

“Each carrier has its own set of underwriting guidelines,” says Alaina Hixson, Nashville, Tennessee-based director of sales and operations at The Churchill Agency, an independent agency offering home, auto and life insurance nationwide.

So, the fact that one company has rejected your application doesn't mean all others will follow suit.

You can also contact an independent insurance agent or broker with the expertise to find companies that offer coverage to homeowners in your situation.

Also, if your application has been rejected for reasons related to its current condition, it’s possible that making repairs or upgrades to your home will be enough to get an insurance company to reverse its position and offer you coverage.

Finally, if you simply can't find coverage anywhere, chances are good that your state offers help getting home insurance, either through a FAIR plan or a state-backed homeowners insurance company.

Options for high-risk home insurance

If standard home insurance is not available, you can look at non-standard insurers, an HO-8 policy for older homes or a state-backed FAIR Plan. These options help you get coverage when your home is considered high-risk, but they can cost more and offer less protection than a standard policy.

Non-standard home insurance companies

Non-standard home insurance companies cover homes that regular insurers reject or price too high. You may need this type of insurer if your home has unusual construction, sits in a high-risk weather or crime area, is vacant for part of the year or is used as a vacation home.

  • Have non-standard construction elements, such as timber framing or a flat roof
  • Are located in areas prone to damaging weather or vulnerable to crime
  • Are empty for a period
  • Are vacation homes

A home can also fall into this category based on the owner’s personal history, such as someone who has declared bankruptcy or has a history of criminal convictions.

HO-8 and other policy options

HO-8 policies are also known in the insurance industry as modified form coverage. This type of policy is typically used for homes built at least 40 years ago or that have been named historic landmarks.

An HO-8 policy provides much of the coverage found in a typical homeowners insurance policy but also has specific provisions that address the aging nature of the home. These policies typically offer actual cash value coverage instead of replacement cost coverage.

Another type of policy – the HO-7 form – is used to insure mobile homes and manufactured homes.

State FAIR plans

When homeowners can’t find coverage in the traditional marketplace, many states offer a safety net through shared-market or assigned-risk plans. FAIR (Fair Access to Insurance Requirements) plans are state-mandated property insurance programs that provide crucial, last-resort protection for high-risk homes.

The primary types of shared-market plans are FAIR plans and beach and windstorm plans.

FAIR -- Fair Access to Insurance Requirements -- plans emerged in the 1960s and were explicitly intended to give homeowners a way to get insurance when their home was in a high-risk area.

Although these plans provide crucial protection to homeowners who can’t obtain coverage through the traditional insurance market, they have drawbacks.

“This option only provides limited coverage on the home and is not an ideal choice,” Hixson says.

Every FAIR plan covers losses due to:

  • Fire
  • Vandalism
  • Riot
  • Windstorm

In addition, around a dozen states have FAIR plans that offer standard homeowners insurance, including liability. States also may include other types of coverage in their FAIR plans, such as wildfires in California and wind and hail coverage for some communities in Georgia and New York.

You must meet certain conditions to qualify for a FAIR plan, such as making necessary home improvements or repairs.

In seven states along the Atlantic and Gulf coasts, beach and windstorm plans are offered to homeowners who live in areas at high risk for hurricane and windstorm damage.

States with these plans include:

  • Alabama
  • Florida
  • Mississippi
  • New York
  • North Carolina
  • South Carolina
  • Texas

Reaching out to your state insurance department can help you determine if one of these plans is available or if the state knows other insurers who might help get you coverage.

FAIR plans offer less coverage than traditional home insurance coverage and can sometimes be costly.

“Utilizing the FAIR Plan should be a last resort, as it only provides restricted coverage for your home,” Hixson says.

However, she adds that this coverage “may be necessary if no other carrier will insure your property and you have a home loan” since most lenders will require you to carry homeowners insurance.

What to do if you can't get homeowners insurance because of claims

If you are denied homeowners insurance because of past claims, you have the same options as anyone else considered high-risk for home insurance. Past claims, both on the home and on your record in other homes, can make it difficult to get insurance.

What makes a home high-risk?

A home becomes high-risk when an insurer sees a greater chance of expensive claims. That can come from wildfire or coastal exposure, outdated systems, poor maintenance, an old roof, unusual construction or multiple past claims. When the risk no longer meets the insurer’s underwriting criteria, coverage can be denied or not renewed.

Insurance companies look to their guidelines for underwriting when determining whether a home is too risky to insure, Hixson says.

“If a home does not fit those guidelines anymore, the company will no longer accept that risk,” she says.

She cites the example of a company that decides to stop writing policies in locations deemed to be at higher risk for fires.

"They may stop providing coverage in that area due to the possibility of increased claims exposure," Hixson says. "Too many claims and certain types of claims may also be cause for policy refusal at renewal."

What can you do to avoid needing high-risk insurance?

You can reduce the chance of needing high-risk insurance by keeping your home in good condition. Repair roof damage, update old plumbing or wiring, trim overhanging trees, add handrails and fix hazards quickly. Showing proof of repairs can help an insurer feel more comfortable offering or renewing coverage. 

Hixson says insurance companies may give an insured homeowner time to fix damages or reduce liability before refusing to renew coverage.

“Overhanging trees or not having handrails on steps are common instances of this,” she says. “In these cases, the insured can provide proof of repairs and give the company enough confidence to underwrite them.”

Keeping up the maintenance of your home is another crucial step you can take to prevent your home from slipping into the high-risk category, Hixson says.

Do I have to have homeowners insurance?

You need homeowners insurance if you have a mortgage because lenders require it to protect the home. If you own your home outright, you are not required to buy coverage, but skipping it puts your finances at serious risk. A major fire, storm or lawsuit could cost you hundreds of thousands of dollars.

For many people, their home is their most valuable asset. Without adequate homeowners insurance, you could face uninsured losses that amount to hundreds of thousands of dollars – or even more – should disaster strike. 

Homeowners insurance also offers liability coverage that can protect you if you injure someone or you damage their property and are held responsible.

Sources

FAQ: High-risk home insurance

What would make a home uninsurable?

A home can become uninsurable if it is unsafe, severely damaged or in major disrepair. Fire, flood or storm damage that has not been repaired can also make coverage difficult to get. Insurers need the property to be safe enough to live in and in good enough condition to insure.

If you have a mortgage and can’t get home insurance, your lender can buy force-placed insurance for the property. This coverage protects the lender, not you, and it is often expensive. To avoid that, keep shopping for coverage or use a shared-market plan if standard insurance is unavailable.

Yes, getting homeowners insurance after being dropped can be harder because insurers see the cancellation or nonrenewal as a risk signal. Your best move is to ask why coverage ended, fix any correctable issues and work with an independent agent who can compare options for higher-risk homes.

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