Can Homeowners Insurance Drop Your Policy?


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If you aren’t paying your premiums, live in a high-risk area or make fraudulent insurance claims, your homeowners insurance company may drop your policy. You should receive a written notice if an insurer decides to cancel your policy or not renew it. You can avoid nonrenewal or cancellation of your policy by understanding when and why your home insurance may drop you, ensuring your home is always protected.

Key Takeaways

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Home insurance companies can cancel your policy for reasons like premium nonpayment, frequent claims, living in high-risk areas or committing insurance fraud.

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Getting new home insurance after being dropped can be challenging, often leading to higher premiums, limited coverage options and stricter terms.

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FAIR Plans offer a last-resort option for high-risk homeowners who cannot secure insurance through traditional providers, though coverage is typically limited.

Can Homeowners Insurance Cancel Your Policy?

Homeowners insurance companies may cancel your policy for various reasons, often due to increased risk factors on your property or policy violations. Insurance companies assess risk regularly and may decide to end your policy if they deem it too high to maintain coverage. Being dropped from your policy can leave you without coverage when you need it most, but familiarizing yourself with the potential causes can help you mitigate risks and keep your insurance.

Why Home Insurance Companies Cancel Policies

You may face a home insurance cancellation if you don't make your premium payments on time or if your insurer suspects fraudulent claim activity, among other reasons.

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    Nonpayment of Premiums

    Your insurer may drop you if you routinely miss insurance payments. Making on-time payments is necessary to maintain your policy and guarantee ongoing coverage. Multiple missed payments indicate unstable finances and a higher risk for insurers.

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    Significant Changes in the Danger to Your Property

    If you make significant changes to your property, such as adding a pool or neglecting safety precautions, your insurer may drop you. These modifications may raise the possibility of mishaps or property damage, forcing insurers to review your coverage. To prevent surprises, make sure any changes adhere to the terms of your insurance and notify your insurer.

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    Fraudulent Claims

    You risk immediate policy cancellation if you submit fabricated or inflated claims. Insurance fraud is a crime that carries legal ramifications in addition to the cancellation of your policy. Always give your insurer accurate information to keep your coverage.

Can Homeowners Insurance Drop You After a Claim?

Homeowners insurance can drop you after a claim if the insurer considers you a higher risk. The decision often hinges on the nature and frequency of the claims made. Insurers might cancel policies if they anticipate future claims that could affect their financial stability. For instance, here are examples of when homeowners insurance providers might drop you after a claim:

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    Frequent Claims

    If you file several claims in a short amount of time, your insurance may drop you. A high claim frequency indicates a high-risk property, which makes insurers reevaluate their coverage. Independently handling minor repairs is frequently preferable to filing unacceptably high claims.

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    Large or Expensive Claims

    Filing a large or expensive claim may result in the cancellation of your coverage. Insurers view large claims as an indication of future high costs, which would lead them to reduce risk by removing coverage.

Aftermath of Losing a Home Insurance Policy

Getting homeowners insurance after being dropped by your previous insurer may take time and effort. This situation often raises red flags for other insurance companies, signaling that your property is at higher risk.

These are the potential impacts to be wary of if you get dropped by your provider:

Higher Premiums

Limited Coverage Options

Stricter Terms and Conditions

Potential Lapses in Coverage

How to Get Homeowners Insurance After Being Dropped

Getting homeowners insurance after being dropped or not renewed can be challenging, but it's entirely possible with the right approach. Begin by understanding the reasons for your policy cancellation and address those issues promptly. Follow these steps to effectively navigate the process of obtaining new homeowners insurance after being dropped.

  1. 1

    Recognize the Causes

    There is a reason why your home's insurance was terminated, and by identifying the cause, you can solve the issue and avoid recurring situations. Make sure you pinpoint and address the problems that caused your policy cancellation in the first place.

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    Speak With Your Insurer

    Get in touch with your former insurer to discuss the matter before searching for new coverage. It is occasionally possible to fix the problems that led to cancellation, which opens the door to reinstating your insurance. Keeping lines of communication open with your insurance may offer ways to prevent cancellations in the future.

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    Get a CLUE Report

    You should request a Comprehensive Loss Underwriting Exchange (CLUE) report so insurance firms can evaluate your risk profile. A thorough history of your prior insurance claims and any questions you may have had about your coverage are included in this report. You can correct any errors and offer accurate information when applying for new insurance.

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    Shop Around for New Insurance

    If reinstatement is impossible or you choose to find a new insurer, compare homeowners insurance quotes from multiple providers. This step will help you find coverage that suits your requirements and budget. Taking the time to shop around can help you find a better policy that meets your needs.

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    Apply for a New Policy and Provide Accurate Information

    When applying for new homeowners insurance, ensure that you provide accurate and complete information to the insurance company. Transparency is key to securing coverage and withholding or misrepresenting information could lead to future complications. Providing honest and thorough details helps build trust with your new insurer and avoids potential issues.

What to Do if You Still Can’t Get Homeowners Insurance

A Fair Access to Insurance Requirements (FAIR) Plan is an option if traditional homeowners insurance providers are unable to provide coverage for you. These plans are intended for those with red flags that typically worry traditional insurers, such as homeowners in high-risk locations. FAIR Plans are run at the state level and supported by taxpayers and commercial insurance carriers.

FAIR Plans operate differently from traditional insurers, using shared market plans that distribute risk among several insurers. While they provide basic coverage, it is usually restricted and frequently only covers personal property and dwelling on a specified perils basis. There might not be many or any options available for liability, medical expenses or loss of use coverage. Despite these drawbacks, a FAIR Plan might offer the essential security to guarantee that your house is insured if alternative solutions are unavailable.

How to Prevent Being Dropped By Your Home Insurance

Preventing being dropped by your homeowners insurance provider involves making timely premium payments, minimizing claims and keeping your property in good condition. We highlight these and more tips below so you can maintain your home coverage:

  • Pay Premiums on Time: Consistently pay your insurance premiums by the due date to avoid the risk of cancellation due to nonpayment. Setting up automatic payments can help ensure you never miss a payment.
  • Limit Claims: Only file claims for significant damages and handle minor repairs yourself. Frequent claims can signal higher risk to insurers, increasing the likelihood of policy termination.
  • Maintain Your Property: Regularly inspect and maintain your property to prevent potential issues. Addressing hazards and keeping your home in good condition reduces the risk of accidents or damage, making you a more favorable policyholder.
  • Provide Accurate Information: Always provide truthful and complete information when applying for or updating your insurance policy. Misrepresentation or inaccuracies can lead to cancellation if discovered by the insurer.
  • Communicate With Your Insurer: Keep open lines of communication with your insurance provider. Inform it of any significant changes to your property or circumstances to ensure your policy remains appropriate and valid.

Following the above suggestions can help you stay insured and avoid any policy issues with your provider.

FAQ About Being Dropped From Your Home Insurance

Navigating homeowners insurance can be challenging, especially when facing the possibility of being dropped by your provider. To help you understand and manage these situations, we've compiled a list of frequently asked questions.

What can you do if your homeowners insurance drops you?

Will filing too many claims cause your homeowners insurance to drop you?

How can you avoid being dropped by your homeowners insurance provider?

Can your insurance be dropped if your credit score changes?

What is a nonrenewal and how is it different from cancellation?

About Mark Fitzpatrick


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Mark Fitzpatrick is a Licensed Property and Casualty Insurance Producer and MoneyGeek's Head of Insurance. He has analyzed the insurance market for over five years, conducting original research and creating personalized content for every kind of buyer. He has been quoted in several insurance-related publications, including CNBC, NBC News and Mashable.

Fitzpatrick earned a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his knowledge of economics and insurance to bring transparency around financial topics and help others feel confident in their money moves.