Top 5 Reasons Why Your Insurance Company Will Drop Your Home Insurance Coverage
Did you know? If your insurance company decides that you haven’t lived up to your obligations they do have the legal right to terminate your policy.
While homeowners insurance can be considered a necessary evil, it can also be a financial lifesaver if your home or possessions are destroyed by a storm or other covered peril.
Homeowners coverage is a two way street, you trust the insurance company to pay out a claim if experience damage to your home and they expect you to pay your premium on time, maintain your home properly and not make phony claims on your policy.
If your insurance company decides that you haven’t lived up to your obligations they do have the legal right to terminate your policy. If your policy ends up being cancelled it can be difficult to find a new one as insurance companies frown on customers who have been cancelled.
There are a number of reasons that you may find yourself on the wrong end of a cancellation notice but we are only focusing on the top 5 most common reasons today.
#1 Not Paying Your Premium
This is a big one, if you fail to pay your premium, your policy will absolutely be cancelled, but probably not right away. While conditions will vary, most insurance companies allow policyholders a 30-day grace period to catch up on a premium.
If you manage to come up with the money during this grace period your coverage will stay intact but if you fail to pay there is a good chance your coverage will be cancelled. However, if you have made a number of claims recently, have a very old roof or have consistently been late with payments they may cancel your policy immediately without a grace period.
#2 Older Roof
It’s possible that if your roof is of a certain age your insurance company may request that you replace it or you may risk having your policy cancelled.
In most cases, the lifespan of a roof is 30 years and once you go past that age you run the risk of the roof leaking or failing during a major storm, which can lead to a claim.
Insurance companies may inspect your home on a periodic basis and if it turns out that your roof is in poor condition you may be faced with the decision to replace it or start looking for a new insurance company.
#3 Pets Can Be a Problem
While most pets are covered by a standard homeowners insurance policy, certain breeds, exotic pets or a pet that has a history of biting may be a reason for your insurance company to dump your coverage.
Many standard policies have exclusions in their policies that address exotic pets such as certain snakes and dog breeds. Check your policy or contact your agent for a list of exclusions before bringing an exotic pet or new dog into your home, pit bulls are often an excluded breed.
Helpful Article: Homeowners Insurance: Liability for Pet Owners
#4 Numerous Claims
Filing numerous claims, especially in a short time period is a huge red flag for insurers and will often lead to cancellation. This is especially true if you make numerous claims for the same issues, a leaking roof for example.
While the claim cutoff varies between insurance companies, in general if you are making more than one claim during the term of your policy (usually a year) you may end up being cancelled.
It is always a good idea to save your insurance for major incidents and pay for small damages out of pocket. This will help keep your premiums affordable and ensure your insurance company doesn’t cancel your policy.
#5 Insurer Moves Out of Your Area
In this case, it won’t be your fault that your coverage is cancelled. In some cases, it is often after a major storm that resulted in thousands of claims, an insurer will decide to no longer offer policies in certain areas.
The decision to pull out of a specific area can be due to storm damage, flooding, crime or even fires and earthquakes. If your insurer decides not to renew your policy there is nothing you can do except shop for new coverage.
A Few Tips to Avoid Being Cancelled
Common sense is king when it comes to not being cancelled. Here are just a few tips to help you keep your coverage:
- Pay Your Premium: Keep your policy in force by always paying your premium on time. If you know you are going to be late with a payment notify your insurer immediately and make a plan to catch up the payment. Verify your policy is still intact while you go through the grace period in the event you experience a loss.
- Maintain Your Home
Perform routine maintenance on your home and repair any damage immediately. This is especially true for your roof. Trim back trees and replace rotting wood or shingles to make sure your home is safe. - Save Your Policy Only use your homeowner policy for major incidents, do not file a claim for small issues, pay them out of pocket. Filing numerous claims will usually result in a premium increase at best and a cancellation at worst.